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 --------------------------------------------- PETROLEUM & RESOURCES CORPORATION -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 7 Saint Paul Street, Suite 1140, Baltimore, Maryland 21202 -------------------------------------------------------------------------------- (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 -------------------------------------------------------------------------------- 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 ------------ 119,813,228 ------------ 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 ------------ 163,970,326 ------------ 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 ------------ 100,342,949 ------------ Coals -- 0.1% CONSOL Energy Inc.................. 30,000 951,900 ------------ 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 ------------ 55,178,720 ------------ Total Stocks And Convertible Securities (Cost $324,572,197) (D)....................... $732,139,569 ------------ 9 SCHEDULE OF INVESTMENTS (continued) -------------------------------------------------------------------------------- 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 ----------- 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 ------------ 34,780,238 ------------ Total Short-Term Investments (Cost $49,993,188)................... 49,993,188 ------------ Securities Lending Collateral -- 4.0% Brown Brothers Investment Trust, 5.25%, due 10/2/06......... 31,187,345 ------------ Total Securities Lending Collateral (Cost $31,187,345)................... 31,187,345 ------------ 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) ------------ Net Assets -- 100.0% $783,638,172 ============ -------------------------------------------------------------------------------- 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. ----------------- 10 SCHEDULE OF OUTSTANDING OPTION CONTRACTS -------------------------------------------------------------------------------- September 30, 2006 (unaudited) Contracts Contract (100 shares Strike Expiration Appreciation/ each) Security Price Date (Depreciation) -------------------------------------------------------------------------------------- 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 ----- ---------- 1,230 28,219 ----- ---------- 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) ----- ---------- 1,550 (105,828) ----- ---------- $ (77,609) ========== 12 (SELECTED) NOTES TO FINANCIAL STATEMENTS (Unaudited) -------------------------------------------------------------------------------- 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 ----------------------- 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 ----------------------- Douglas G. Ober Chief Executive Officer (Principal Executive Officer) Date: April 25, 2007 BY: /s/ Maureen A. Jones ----------------------- Maureen A. Jones Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) Date: April 25, 2007