UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF
REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-02736
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PETROLEUM & RESOURCES CORPORATION
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(Exact name of registrant as specified in charter)
7 Saint Paul Street, Suite 1140, Baltimore, Maryland 21202
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(Address of principal executive offices) (Zip code)
Lawrence L. Hooper, Jr.
Petroleum & Resources Corporation
7 Saint Paul Street
Suite 1140
Baltimore, Maryland 21202
Registrant's telephone number, including area code: 410-752-5900
Date of fiscal year end: December 31, 2006
Date of reporting period: September 30, 2006
Item 1: SCHEDULE OF INVESTMENTS.
SCHEDULE OF INVESTMENTS
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September 30, 2006
(unaudited)
Shares
or Units Value (A)
- --------- ------------
Stocks And Convertible Securities -- 93.4%
Energy -- 86.4%
Integrated -- 37.3%
Aventine Renewable Energy
Holdings, Inc. (B)............ 40,000 $ 855,600
BP plc ADR..................... 425,000 27,871,500
Chevron Corp................... 635,000 41,186,100
ConocoPhillips................. 556,891 33,151,721
Exxon Mobil Corp............... 1,245,000 83,539,500
Hess Corp. (B)................. 195,000 8,076,900
Holly Corp..................... 420,000 18,198,600
Marathon Oil Co................ 120,000 9,228,000
Murphy Oil Corp................ 216,500 10,294,575
Royal Dutch Shell plc ADR...... 275,000 18,177,500
Suncor Energy.................. 100,000 7,205,000
Total S.A. ADR................. 240,000 15,825,600
Valero Energy Corp............. 355,000 18,271,850
------------
291,882,446
------------
Exploration & Production -- 15.3%
Apache Corp.................... 158,200 9,998,240
Devon Energy Corp.............. 340,000 21,471,000
EOG Resources, Inc............. 320,000 20,816,000
Hugoton Royalty Trust.......... 23,343 615,088
Newfield Exploration Co. (C)... 175,000 6,744,500
Noble Energy, Inc. (B)......... 430,000 19,603,700
Occidental Petroleum Corp...... 400,000 19,244,000
Pioneer Natural
Resources Co.................. 125,000 4,890,000
XTO Energy Inc................. 390,000 16,430,700
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119,813,228
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Services -- 20.9%
Baker Hughes, Inc.............. 205,000 13,981,000
BJ Services Co................. 740,000 22,296,200
Bronco Drilling Co., Inc. (C).. 4,600 80,868
ENSCO International, Inc....... 134,150 5,879,795
GlobalSantaFe Corp............. 290,000 14,497,100
Grant Prideco Inc. (C)......... 308,000 11,713,240
Hercules Offshore, Inc......... 160,000 4,968,000
Nabors Industries Ltd. (C)..... 520,000 15,470,000
Noble Corp..................... 200,000 12,836,000
Schlumberger Ltd............... 560,000 34,736,800
TODCO (C)...................... 200,000 6,920,000
Weatherford International,
Ltd. (C)...................... 493,560 20,591,323
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163,970,326
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Shares
or Units Value (A)
- -------- ------------
Utilities -- 12.8%
AGL Resources Inc.................. 170,000 $ 6,205,000
Duke Energy Corp................... 217,624 6,572,245
Energen Corp....................... 400,000 16,748,000
Equitable Resources Inc............ 450,000 15,741,000
MDU Resources Group, Inc........... 375,000 8,377,500
National Fuel Gas Co. (B).......... 200,000 7,270,000
New Jersey Resources Corp.......... 200,000 9,860,000
Questar Corp....................... 200,000 16,354,000
SEMCO Energy, Inc.................. 438,600 2,473,704
Williams Companies, Inc. (B)....... 450,000 10,741,500
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100,342,949
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Coals -- 0.1%
CONSOL Energy Inc.................. 30,000 951,900
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Basic Industries -- 7.0%
Basic Materials & Other -- 7.0%
Air Products and Chemicals,
Inc............................... 125,000 8,296,250
Aqua America, Inc. (B)............. 352,000 7,722,880
Arkema Inc......................... 6,000 284,700
du Pont (E.I.) de Nemours and Co... 157,500 6,747,300
Florida Rock Industries Inc........ 105,000 4,064,550
General Electric Co................ 454,800 16,054,440
Martin Marietta Materials, Inc..... 30,000 2,538,600
Rohm & Haas Co..................... 200,000 9,470,000
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55,178,720
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Total Stocks And Convertible Securities
(Cost $324,572,197) (D)....................... $732,139,569
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9
SCHEDULE OF INVESTMENTS (continued)
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September 30, 2006
(unaudited)
Prin. Amt. Value (A)
- ----------- -----------
Short-Term Investments -- 6.3%
U.S. Government Obligations -- 1.9%
U.S. Treasury Bills,
4.74-4.98%, due 11/16/06.......... $15,000,000 $14,905,301
-----------
Time Deposit -- 0.0%
Bank of America Corp.,
4.63%, due 10/2/06................ 307,649
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Commercial Paper -- 4.4%
American General Finance, Inc.,
5.25%, due 10/24/06 3,900,000 3,886,931
Cargill, Inc.,
5.23%, due 10/23/06 3,900,000 3,887,535
Chevron Funding Co.,
5.20%, due 10/5/06................ 3,500,000 3,497,978
General Electric Capital Corp.,
5.21-5.23%, due 10/12/06-
10/26/06.......................... 6,300,000 6,281,814
General Electric Capital Services
Corp.,
5.23%, due
10/10/06-10/31/06................. 6,350,000 6,336,765
Prin. Amt. Value (A)
- ----------- ------------
Toyota Motor Credit Corp., 5.20-
5.23%, due 10/5/06-10/19/06 $ 4,500,000 $ 4,491,126
United Parcel Services, Inc.,
5.12%, due 10/5/06 6,400,000 6,398,089
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34,780,238
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Total Short-Term Investments
(Cost $49,993,188)................... 49,993,188
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Securities Lending Collateral -- 4.0%
Brown Brothers Investment
Trust, 5.25%, due 10/2/06......... 31,187,345
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Total Securities Lending Collateral
(Cost $31,187,345)................... 31,187,345
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Total Investments -- 103.7%
(Cost $405,752,730).............................. 813,320,102
Cash, receivables, prepaid
expenses and other
assets, less liabilities -- (3.7)%. (29,681,930)
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Net Assets -- 100.0% $783,638,172
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Notes:
(A)See note 1 to financial statements. Securities are listed on the New York
Stock Exchange, the American Stock Exchange, or the NASDAQ.
(B)Some of the shares of this company are on loan. See note 8 to financial
statements.
(C)Presently non-dividend paying.
(D)The aggregate market value of stocks held in escrow at September 30, 2006
covering open call option contracts written was $8,747,710. In addition, the
aggregate market value of securities segregated by the Corporation's
custodian required to collateralize open put option contracts written was
$7,312,500.
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10
SCHEDULE OF OUTSTANDING OPTION CONTRACTS
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September 30, 2006
(unaudited)
Contracts Contract
(100 shares Strike Expiration Appreciation/
each) Security Price Date (Depreciation)
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COVERED CALLS
150 Holly Corp.............................. $ 60 Dec 06 $ 16,709
200 Marathon Oil Co......................... 100 Jan 07 24,171
30 Martin Marietta Materials, Inc.......... 140 Oct 06 (1,900)
50 Martin Marietta Materials, Inc.......... 100 Jan 07 5,159
100 Murphy Oil Corp......................... 55 Oct 06 12,699
500 Questar Corp............................ 80 Jan 07 (49,518)
200 Total S.A. ADR.......................... 70 Nov 06 20,899
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1,230 28,219
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COLLATERALIZED PUTS
150 Aventine Renewable Energy Holdings, Inc. 22.50 Oct 06 (13,950)
100 ENSCO International, Inc................ 40 Oct 06 6,699
200 ENSCO International, Inc................ 45 Oct 06 (17,523)
250 ENSCO International, Inc................ 40 Dec 06 (10,751)
100 Florida Rock Industries Inc............. 35 Dec 06 6,949
100 Florida Rock Industries Inc............. 30 Jan 07 5,199
100 Marathon Oil Co......................... 75 Oct 06 (5,300)
100 Marathon Oil Co......................... 67.50 Jan 07 (8,800)
100 Suncor Energy........................... 65 Oct 06 4,199
100 Suncor Energy........................... 65 Dec 06 (8,800)
150 Valero Energy Corp...................... 50 Dec 06 (27,450)
100 Valero Energy Corp...................... 55 Dec 06 (36,300)
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1,550 (105,828)
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$ (77,609)
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12
(SELECTED) NOTES TO FINANCIAL STATEMENTS (Unaudited)
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Petroleum & Resources Corporation (the Corporation) is
registered under the Investment Act of 1940 as a
nondiversified investment company. The Corporation is an
internally-managed fund emphasizing petroleum and other
natural resource investments. The investment objectives of
the Corporation are preservation of capital, the attainment
of reasonable income from investments, and an opportunity
for capital appreciation.
Security Valuation-Investments in securities traded on
national security exchanges are valued at the last reported
sale price on the day of valuation. Over-the-counter and
listed securities for which a sale price is not available
are valued at the last quoted bid price. Short-term
investments (excluding purchased options) are valued at
amortized cost. Purchased and written options are valued at
the last quoted asked price.
For federal income tax purposes, the identified cost of
securities at September 30, 2006 was $405,722,907 and net
unrealized appreciation aggregated $407,597,195, of which
the related gross unrealized appreciation and depreciation
were $414,269,677 and $6,672,482, respectively.
8. PORTFOLIO SECURITIES LOANED
The Corporation makes loans of securities to brokers,
secured by cash deposits, U.S. Government securities, or
bank letters of credit. The Corporation accounts for
securities lending transactions as secured financing and
receives compensation in the form of fees or retains a
portion of interest on the investment of any cash received
as collateral. The Corporation also continues to receive
interest or dividends on the securities loaned. The loans
are secured at all times by collateral of at least 102% of
the fair value of the securities loaned plus accrued
interest. Gain or loss in the fair value of securities
loaned that may occur during the term of the loan will be
for the account of the Corporation. At September 30, 2006,
the Corporation had securities on loan of $30,339,147 and
held collateral of $31,187,345, consisting of an investment
trust fund which may invest in money market instruments,
commercial paper, repurchase agreements, U.S. Treasury
Bills, and U.S. agency obligations.
Item 2. CONTROLS AND PROCEDURES.
Conclusions of principal officers concerning controls and
procedures:
(a) As of April 24, 2007, an evaluation was performed under
the supervision and with the participation of the officers
of Petroleum & Resources Corporation (the
"Corporation "), including the principal executive officer
("PEO") and principal financial officer ("PFO"), of the
effectiveness of the Corporation's disclosure controls and
procedures. Based on that evaluation, the Corporation's
officers, including the PEO and PFO, concluded that, as of
April 24, 2007, the Corporation's disclosure controls and
procedures were reasonably designed so as to ensure: (1)
that information required to be disclosed by the Corporation
on Form N-Q is properly recorded, processed, and summarized
in accordance with the rules and forms of the Securities and
Exchange Commission; and (2) that material information
relating to the Corporation is made known to the PEO and PFO
as appropriate to allow timely decisions regarding required
disclosure.
Prior to this evaluation, the Corporation uncovered a
weakness in its disclosure controls and procedures that
caused this Form N-Q, which was due to be filed on or before
November 29, 2006, not to be filed timely. This weakness
was primarily attributable to human error. The 2006 Third
Quarter Report to stockholders, containing the exact
portfolio information called for in this Form N-Q, was
timely issued and filed; however the Corporation failed to
file this Form N-Q by the due date. To prevent similar
problems in the future, the Corporation has modified its
computer-based reminder system to issue alerts to the
appropriate personnel of the need to prepare and file the
Forms N-Q several times during the 60 day period for the
filing.
(b) There have been no significant changes in the
Corporation's internal control over financial reporting (as
defined in Rule 30 a-3(d) under the Investment Company Act
of 1940 (17 CFR 270.30a-3(d)) that occurred during the
Corporation's last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the
Corporation's internal control over financial reporting.
Item 3. EXHIBITS.
The certifications of the principal executive officer and
principal financial officer pursuant to Rule 30 a-2(a) under
the Investment Company Act of 1940 are attached hereto as
Form N-Q Certifications.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, the
registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
PETROLEUM & RESOURCES CORPORATION
BY: /s/ Douglas G. Ober
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Douglas G. Ober
Chief Executive Officer
Date: April 25, 2007
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, this report
has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates
indicated.
BY: /s/ Douglas G. Ober
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Douglas G. Ober
Chief Executive Officer
(Principal Executive Officer)
Date: April 25, 2007
BY: /s/ Maureen A. Jones
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Maureen A. Jones
Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: April 25, 2007