Edgar Filing: PETROLEUM & RESOURCES CORP

PETROLEUM & RESOURCES CORPORATION - FORM N-CSR - DECEMBER 31, 2013

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

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)

Lawrence L. Hooper, Jr.
Petroleum & Resources Corporation
7 Saint Paul Street, Suite 1140
Baltimore, Maryland 21202
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(Name and address of agent for service)

Registrant's telephone number, including area code: (410) 752-5900
Date of fiscal year end: December 31
Date of reporting period: December 31, 2013

Item 1. Reports to Stockholders.

LOGO

2013 AT A GLANCE

THE FUND

a closed-end equity investment company specializing in energy and resources stocks

objectives: preservation of capital

reasonable income

opportunity for capital gain

internally-managed

annual distribution rate of at least 6%

STOCK DATA (12/31/13)

NYSE Symbol ........... PEO

Market Price .............. $27.38

52-Week Range ......... $24.11–$29.00

Discount ..................... 15.1%

Shares Outstanding ..... 26,775,228

SUMMARY FINANCIAL INFORMATION


	Year Ended December 31,
	2013		2012
Net asset value per share	$	32.26	$	27.84
Total net assets		863,689,833		732,988,462
Unrealized appreciation on investments		402,483,744		284,191,650
Net investment income		11,590,396		12,359,977
Net realized gain		37,428,311		30,465,396
Total return (based on market price)		22.7%		4.3%
Total return (based on net asset value)		24.2%		4.0%
Ratio of expenses to average net assets		0.78%		0.65%
Annual distribution rate		7.2%		6.4%

2013 DIVIDENDS AND DISTRIBUTIONS


Paid	Amount (per share)		Type
March 1, 2013	$	0.04	Long-term capital gain
March 1, 2013		0.03	Short-term capital gain
March 1, 2013		0.03	Investment income
June 3, 2013		0.10	Investment income
September 3, 2013		0.10	Investment income
December 27, 2013		1.27	Long-term capital gain
December 27, 2013		0.08	Short-term capital gain
December 27, 2013		0.23	Investment income

	$	1.88

2014 ANNUAL MEETING OF SHAREHOLDERS

Location: Four Seasons Hotel, Baltimore, Maryland

Date: April 10, 2014

Time: 10:00 a.m.

PORTFOLIO REVIEW

December 31, 2013

(unaudited)

TEN LARGEST EQUITY PORTFOLIO HOLDINGS


	Market Value		% of Net Assets
Exxon Mobil Corp.	$	150,123,116		17.4	%
Chevron Corp.		95,331,312		11.0
Schlumberger Ltd.		56,318,750		6.5
Occidental Petroleum Corp.		38,515,500		4.5
EOG Resources, Inc.		29,372,000		3.4
LyondellBasell Industries N.V. (Class A)		27,696,600		3.2
Phillips 66		26,631,061		3.1
Halliburton Co.		25,063,903		2.9
Dow Chemical Co.		24,309,000		2.8
Anadarko Petroleum Corp.		23,796,000		2.8

Total	$	497,157,242		57.6	%

SECTOR WEIGHTINGS

LOGO

LETTER TO SHAREHOLDERS

Dear Fellow Shareholders,

By any measure, 2013 was a banner year for the U.S. stock market. Few would have expected such a robust stock market in the face of the many things that transpired during 2013. Markets experienced a strong start to 2013 as the “fiscal cliff” and the potential consequences of federal spending cuts and tax increases were averted. Concerns of a weakening U.S. economy subsided with the flow of solid corporate earnings growth and a modest economic recovery. High unemployment rates and low inflation reinforced the Federal Reserve’s (Fed) resolve to continue accommodative monetary policy, keeping a lid on interest rates. Stabilization in Europe and a managed slowdown in China fostered optimism for investors.

The rally was sustained in February, but at a significantly reduced rate. Investor enthusiasm was tempered as retailers expressed caution, economic growth slowed in China, and many European countries were in a recession. However, slow but positive growth in the U.S. was sufficient to offset sequestration cuts and the Fed meeting minutes that revealed discussions of winding down asset purchases. The S&P 500 gained 10.6% through the first quarter as cash flowed back into the equity markets.

The second quarter presented a different story. Despite weakened labor markets, slowing retail sales, and an easing in manufacturing growth, investor sentiment remained bullish through April. The market’s exuberance started to diminish as China’s growth rate continued to contract. Investors balanced economic news with a myopic focus on the Fed’s stimulus program. Comments in May suggesting an end to the stimulus program roiled markets. By the end of the second quarter, dovish comments by the Fed had calmed investor uncertainty.

U.S. equities hit record highs in July as positive earnings reports by companies coincided with improving economic indicators. The unemployment rate fell to the lowest level in five years and interest rates remained low. The S&P 500 exited July with a 19.6% year-to-date gain.

Turbulence quickly followed as investors struggled to balance Fed comments, economic news, and escalating worldwide geopolitical tensions. Volatility stemmed from civil war in Syria and violence in Egypt following a military coup. Rising geopolitical instability in the Middle East/North Africa region put upward pressure on oil prices, creating a headwind for global economic growth. By late September, violence in Egypt subsided and Syria’s risks diminished, supporting a recovery in U.S. markets back to July levels. Europe showed evidence of an upturn, China’s growth stabilized, and the Fed’s tapering was delayed.

The fall also brought the roll-out of the Affordable Care Act (ACA). Rarely has a law been as divisive as the ACA. The online exchange proved difficult with a poor design and under-resourced engine which made it almost impossible for people interested in signing up to do just that. The White House promised fixes that ultimately made the experience more acceptable.

A 16-day shutdown by the U.S. Government in early October and concerns of a budget resolution did little to slow the rise of the markets for the remainder of the year. Stocks hit a new high as government funding was restored. Key economic data, corporate earnings, and labor market results buoyed investors’ sentiment. Reflected in the equity market gains was approval of Janet Yellen’s nomination to head the Fed. As a Bernanke loyalist, she makes continuity at the Fed likely in 2014. The passing by Congress of a two-year budget deal near year-end enhanced the outlook, contributing to the full year gain of 32.4% for the S&P 500.

The slow growing economy and Fed watch yielded diverse results for commodity returns. The prices of various energy commodities increased from 2012 levels as prices of many non-energy commodities fell significantly, responding to oversupply and limited demand growth. Building on a 4-year turn-around in oil production, domestic production increased 15% in 2013. U.S. crude oil production rose to its highest level in 24 years, exceeding net imports of crude for the first time in almost two decades. Rising crude oil production in Texas and North Dakota contributed to relatively stable crude oil prices in 2013. West Texas Intermediate (WTI) spot price averaged $98 per barrel (bbl) in 2013, slightly above its 2012 average price, as new pipeline and railroad infrastructure alleviated transportation constraints that had put downward pressure on WTI prices. The International Brent spot price averaged $109/bbl, down 3% from its 2012 average price.

Widespread turmoil in the Middle East/North Africa caused global supply disruptions. As the United States reduced imports, more crude oil became available to foreign markets, offsetting the unplanned outages and OPEC curtailment decisions. The spread in domestic and global prices and location differentials within domestic prices influenced investor decisions. Refining stocks benefited from these periods of wide differentials in crude costs.

LETTER TO SHAREHOLDERS (CONTINUED)

Dry natural gas production grew just 1% in the year as producers shifted capital spending to focus on more profitable oil drilling. Prompted by extreme weather conditions, gas prices rose over 30% from very low 2012 year-end levels, but the economics for oil drilling remained more attractive than those for gas drilling.

The stabilization of oil and gas prices at a high level and an improving economy yielded a 26.1% increase in the Dow Jones U.S. Oil & Gas Index and a return of 20.4% in the Dow Jones U.S. Basic Materials Index. Petroleum & Resources distributed 7.2% to its shareholders and generated a 24.2% total return on net asset value. By contrast, our diverse peer group, the Lipper Global Natural Resources Funds Index, returned 13.0%.

Exploration and Production companies held by Petroleum & Resources provided the greatest return, rising 30%. A series of promising well results were announced in the Permian basin and Marcellus shale region. The Fund’s overweight positions in producers in these basins, including Pioneer Natural Resources, Energen and EQT, contributed substantially to performance. Similarly, the Fund was rewarded by our holding in Oasis Petroleum, a Bakken oil shale company with strong operational execution and complementary acquisitions. Investing in companies such as Hess, that demonstrated the willingness to shed nonperforming assets, focus on strategic locations and repurchase shares, provided solid results for the Fund. Excellent returns were also captured by overweights in Oil Service industry leaders, namely positions in Halliburton, Oil States International, and Schlumberger. Additionally, Refiners benefited from wide crude spreads and our Phillips 66 holding was a top performer.

Basic Materials stocks significantly underperformed Energy stocks. Within the Basic Materials sector, the Chemical industry group was the strongest performer. Portfolio names that benefited from access to lower cost energy, including Dow Chemical, LyondellBasell and DuPont, surpassed the benchmark returns. We significantly reduced our exposure to Industrial Metals during the year, but our holdings in Cliffs Natural Resources and Teck Resources in the first quarter detracted from returns.

LOOKING FORWARD TO 2014

We start 2014 in a cautious mode as commodity markets are well supplied and tepid oil demand growth is forecasted. Despite the apparent balance in markets, social and political tensions in key commodity producing regions have the potential to create price spikes. At the end of 2013, the Fund maintained large positions in well-diversified Integrated Companies, best-in-class Oil Service names, attractive Exploration and Production companies, and cost-advantaged Refiners and Chemical companies. We expect that domestic and international crude prices are likely to be stable, within a narrow range, early in the year. Natural gas prices will reflect production and inventory statistics with spikes around weather conditions. The catalysts for the Fund’s investments in this environment include companies that offer differentiating fundamentals, create value through asset transactions, exhibit capital spending discipline, and demonstrate shareholder focus through share repurchases and dividend increases.

The Fund was active in repurchasing its shares in 2013 and repurchased a total of 278,774 shares. The Board of Directors has approved the repurchase of up to 5% of the outstanding shares for 2014.

Our investment philosophy and process is very focused on free cash flow generation, earnings growth, valuation, and being properly paid for the risks we are taking. Within this framework we strive to identify high quality companies we can own for an extended period of time. We look for opportunities to take advantage of market anomalies for the benefit of our shareholders. We are encouraged by the increasing strength in the economy both home and abroad and remain optimistic about what that will mean for the Fund in 2014.

By order of the Board of Directors,



Mark E. Stoeckle
Chief Executive Officer

January 24, 2014

STATEMENT OF ASSETS AND LIABILITIES

December 31, 2013


Assets
Investments* at value:
Common stocks (cost $461,286,486)	$	864,155,248
Short-term investments (cost $865,740)		865,740
Securities lending collateral (cost $7,980,044)		7,980,044	$	873,001,032
Cash				241,350
Dividends and interest receivable				739,209
Prepaid pension cost				683,412
Prepaid expenses and other assets				1,148,357
Total Assets				875,813,360
Liabilities
Open written option contracts* at value (proceeds $1,002,142)				1,387,160
Obligations to return securities lending collateral				7,980,044
Accrued pension liabilities				1,393,834
Accrued expenses and other liabilities				1,362,489
Total Liabilities				12,123,527
Net Assets			$	863,689,833

Net Assets
Common Stock at par value $0.001 per share, authorized 50,000,000 shares; issued and outstanding 26,775,228 shares (includes 43,335 nonvested restricted shares, 9,600 nonvested or deferred restricted stock units, and 8,793 deferred stock units) (note 6)			$	26,775
Additional capital surplus				459,809,751
Accumulated other comprehensive income (note 5)				(1,043,354	)
Undistributed net investment income				585,938
Undistributed net realized gain on investments				1,826,979
Unrealized appreciation on investments				402,483,744
Net Assets Applicable to Common Stock			$	863,689,833
Net Asset Value Per Share of Common Stock				$32.26

* See Schedule of Investments on page 14 and Schedule of Outstanding Written Option Contracts on page 17.

The accompanying notes are an integral part of the financial statements.

STATEMENT OF OPERATIONS

Year Ended December 31, 2013


Investment Income
Income:
Dividends (net of $70,023 in foreign taxes)	$	17,582,923
Other income		276,060
Total income		17,858,983
Expenses:
Investment research		2,984,384
Administration and operations		1,586,589
Travel, training, and other office expenses		429,366
Directors’ fees		391,466
Reports and shareholder communications		198,922
Investment data services		164,449
Transfer agent, registrar, and custodian		158,136
Audit and accounting services		104,294
Occupancy		103,344
Insurance		71,558
Legal services		52,622
Other		23,457
Total expenses		6,268,587
Net Investment Income		11,590,396

Realized Gain and Change in Unrealized Appreciation on Investments
Net realized gain on security transactions		34,673,135
Net realized gain on written option contracts		2,755,176
Change in unrealized appreciation on securities		119,260,743
Change in unrealized appreciation on written option contracts		(968,649	)
Net Gain on Investments		155,720,405

Other Comprehensive Income (note 5)
Defined benefit pension plans:
Net actuarial loss arising during period		(20,621	)
Amortization of net loss		278,362
Effect of settlement (non-recurring)		641,408
Other Comprehensive Income		899,149
Change in Net Assets Resulting from Operations	$	168,209,950

The accompanying notes are an integral part of the financial statements.

STATEMENTS OF CHANGES IN NET ASSETS


	For the Year Ended December 31,
	2013			2012
From Operations:
Net investment income	$	11,590,396		$	12,359,977
Net realized gain on investments		37,428,311			30,465,396
Change in unrealized appreciation on investments		118,292,094			(18,061,920	)
Change in accumulated other comprehensive income (note 5)		899,149			91,182
Increase in net assets resulting from operations		168,209,950			24,854,635

Distributions to Shareholders from:
Net investment income		(12,044,136	)		(10,772,359	)
Net realized gain from investment transactions		(37,060,004	)		(30,264,253	)
Decrease in net assets from distributions		(49,104,140	)		(41,036,612	)

From Capital Share Transactions:
Value of shares issued in payment of distributions (note 4)		18,698,338			16,022,167
Cost of shares purchased (note 4)		(7,441,145	)		—
Deferred compensation (notes 4, 6)		338,368			337,580
Increase in net assets from capital share transactions		11,595,561			16,359,747
Total Increase in Net Assets		130,701,371			177,770

Net Assets:
Beginning of year		732,988,462			732,810,692
End of year (including undistributed net investment income of $585,938 and $1,210,241, respectively)	$	863,689,833		$	732,988,462

The accompanying notes are an integral part of the financial statements.

NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Petroleum & Resources Corporation (the Fund) is registered under the Investment Company Act of 1940 as a non-diversified investment company. The Fund is an internally-managed closed-end fund specializing in petroleum and other natural resource investments. The investment objectives of the Fund are preservation of capital, the attainment of reasonable income from investments, and an opportunity for capital appreciation.

The accompanying financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, which require the use of estimates made by Fund management. Management believes that estimates and security valuations are appropriate; however, actual results may differ from those estimates, and the security valuations reflected in the financial statements may differ from the value the Fund ultimately realizes upon sale of the securities.

Expenses — The Fund shares certain costs for investment research and data services, administration and operations, travel, training, office expenses, occupancy, accounting and legal services, insurance, and other miscellaneous items with its non-controlling affiliate, The Adams Express Company. Shared expenses that are not solely attributable to one fund are allocated to each fund based on relative net asset values or, in the case of investment research staff and related costs, relative market values of portfolio securities in the particular sector of coverage. Expense allocations are updated quarterly, as appropriate, except for those related to payroll, which are updated annually.

Security Transactions and Investment Income — Investment transactions are accounted for on the trade date. Gain or loss on sales of securities and options is determined on the basis of specific identification. Dividend income and distributions to shareholders are recognized on the ex-dividend date, and interest income is recognized on the accrual basis.

Security Valuation — The Fund’s investments are reported at fair value as defined under accounting principles generally accepted in the United States of America. 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 and money market funds) are valued at amortized cost, which approximates fair value. Purchased and written options are valued at the last quoted bid and asked price, respectively. Money market funds are valued at net asset value on the day of valuation.

Various inputs are used to determine the fair value of the Fund’s investments. These inputs are summarized in the following three levels:

•

Level 1 — fair value is determined based on market data obtained from independent sources; for example, quoted prices in active markets for identical investments,

•

Level 2 — fair value is determined using other assumptions obtained from independent sources; for example, quoted prices for similar investments,

•

Level 3 — fair value is determined using the Fund’s own assumptions, developed based on the best information available in the circumstances.

The Fund’s investments at December 31, 2013 were classified as follows:


	Level 1			Level 2		Level 3		Total
Common stocks	$	864,155,248		$	—	$	—	$	864,155,248
Short-term investments		865,740			—		—		865,740
Securities lending collateral		7,980,044			—		—		7,980,044
Total investments	$	873,001,032		$	—	$	—	$	873,001,032
Written options	$	(1,387,160	)	$	—	$	—	$	(1,387,160	)

There were no transfers into or from Level 1 or Level 2 during the year ended December 31, 2013.

New Accounting Pronouncements — In February 2013, the Financial Accounting Standards Board issued new guidance, effective for annual and interim periods beginning after December 15, 2012, requiring disclosure of items reclassified out of accumulated other comprehensive income. Adoption of this guidance had no effect on Fund net assets or results of operations and no material impact on the financial statements.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. FEDERAL INCOME TAXES

No federal income tax provision is required since the Fund’s policy is to qualify as a regulated investment company under the Internal Revenue Code and to distribute substantially all of its taxable income to its shareholders. Additionally, management has analyzed and concluded that tax positions included in federal income tax returns from the previous three years that remain subject to examination do not require any provision. Any income tax-related interest or penalties would be recognized as income tax expense. As of December 31, 2013, the identified cost of securities for federal income tax purposes was $470,132,270 and net unrealized appreciation aggregated $402,868,762, consisting of gross unrealized appreciation of $415,801,179 and gross unrealized depreciation of $12,932,417.

Distributions are determined in accordance with our annual 6% minimum distribution rate commitment, based on the Fund’s average market price, and income tax regulations, which may differ from generally accepted accounting principles. Such differences are primarily related to the Fund’s retirement plans and equity-based compensation. Differences that are permanent, while not material for the year ended December 31, 2013, are reclassified in the capital accounts of the Fund’s financial statements and have no impact on net assets. For tax purposes, distributions paid by the Fund during the years ended December 31, 2013 and December 31, 2012 were classified as ordinary income of $14,916,062 and $11,021,223, respectively, and as long-term capital gain of $34,182,041 and $29,988,685, respectively. The tax basis of distributable earnings at December 31, 2013 was $907,706 of undistributed ordinary income and $1,543,208 of undistributed long-term capital gain.

3. INVESTMENT TRANSACTIONS

The Fund’s investment decisions are made by the portfolio management team with recommendations from the research staff. Purchases and sales of portfolio securities, other than options and short-term investments, during the year ended December 31, 2013 were $150,113,656 and $166,636,066, respectively.

The Fund is subject to changes in the value of equity securities held (“equity price risk”) in the normal course of pursuing its investment objectives. The Fund may purchase and write option contracts to increase or decrease its equity price risk exposure or may write option contracts to generate additional income. Option contracts generally entail risks associated with counterparty credit, liquidity, and unfavorable equity price movements. The Fund has mitigated counterparty credit and liquidity risks by trading its options through an exchange. The risk of unfavorable equity price movements is limited for purchased options to the premium paid and for written options by writing only covered call or collateralized put option contracts, which require the Fund to segregate certain securities or cash at its custodian when the option is written. A schedule of outstanding option contracts as of December 31, 2013 can be found on page 17.

When the Fund writes (purchases) an option, an amount equal to the premium received (paid) by the Fund is recorded as a liability (asset) and is subsequently marked to market daily in the Statement of Assets and Liabilities, with any related change recorded as an unrealized gain or loss in the Statement of Operations. Premiums received (paid) from unexercised options are treated as realized gains (losses) on the expiration date and are separately identified in the Statement of Operations. Upon the exercise of written put (purchased call) option contracts, premiums received (paid) are deducted from (added to) the cost basis of the underlying securities purchased. Upon the exercise of written call (purchased put) option contracts, premiums received (paid) are added to (deducted from) the proceeds from the sale of underlying securities in determining whether there is a realized gain or loss.

Transactions in written covered call and collateralized put options during the year ended December 31, 2013 were as follows:


	Covered Calls						Collateralized Puts
	Contracts			Premiums			Contracts			Premiums
Options outstanding, December 31, 2012		6,515		$	753,921			4,053		$	854,856
Options written		25,177			2,705,617			19,393			2,269,638
Options terminated in closing purchase transactions		(4,955	)		(479,523	)		(501	)		(102,881	)
Options expired		(18,962	)		(1,934,852	)		(18,245	)		(2,427,732	)
Options exercised		(3,235	)		(452,206	)		(1,050	)		(184,696	)
Options outstanding, December 31, 2013		4,540		$	592,957			3,650		$	409,185

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. CAPITAL STOCK

The Fund has 5,000,000 authorized and unissued preferred shares, $0.001 par value.

On December 27, 2013, the Fund issued 705,273 shares of its Common Stock at a price of $26.48 per share (the average market price on December 9, 2013) to shareholders of record on November 25, 2013 who elected to take stock in payment of the distribution from 2013 capital gain and investment income. During 2013, 870 shares were issued at a weighted average price of $26.43 per share as dividend equivalents to holders of deferred stock units and restricted stock units under the 2005 Equity Incentive Compensation Plan.

On December 27, 2012, the Fund issued 670,735 shares of its Common Stock at a price of $23.865 per share (the average market price on December 10, 2012) to shareholders of record on November 19, 2012 who elected to take stock in payment of the distribution from 2012 capital gain and investment income. During 2012, 612 shares were issued at a weighted average price of $24.59 per share as dividend equivalents to holders of deferred stock units and restricted stock units under the 2005 Equity Incentive Compensation Plan.

The Fund may purchase shares of its Common Stock from time to time at such prices and amounts as the Board of Directors may deem advisable.

Transactions in Common Stock for 2013 and 2012 were as follows:


	Shares					Amount
	2013			2012		2013			2012
Shares issued in payment of distributions		706,143			671,347	$	18,698,338		$	16,022,167
Shares purchased (at a weighted average discount from net asset value of 14.5%)		(278,744	)		—		(7,441,145	)		—
Net activity under the 2005 Equity Incentive Compensation Plan		22,228			13,236		338,368			337,580
Net change		449,627			684,583	$	11,595,561		$	16,359,747

5. RETIREMENT PLANS

Defined Contribution Plans — The Fund sponsors a qualified defined contribution plan for all employees with at least six months of service and a nonqualified defined contribution plan for eligible employees to supplement the qualified plan. The Fund expensed contributions to the plans in the amount of $160,653, a portion thereof based on company performance, for the year ended December 31, 2013. The Fund does not provide postretirement medical benefits.

Defined Benefit Plans — On October 1, 2009, the Fund froze its non-contributory qualified and nonqualified defined benefit pension plans. Benefits are based on length of service and compensation during the last five years of employment through September 30, 2009, with no additional benefits being accrued beyond that date. The process of terminating the plans will begin in 2014. Upon receiving the required regulatory approvals, all benefits under the Plans will be paid out and all related pension liabilities will be relieved.

The funded status of the plans is recognized as an asset (overfunded plan) or a liability (underfunded plan) in the Statement of Assets and Liabilities. Changes in the prior service costs and accumulated actuarial gains and losses are recognized as accumulated other comprehensive income, a component of net assets, in the year in which the changes occur and are subsequently amortized into net periodic pension cost. Non-recurring settlement costs are recognized in net periodic pension cost when a plan participant receives a lump-sum benefit payment and includes the amount of which is in excess of the present value of the projected benefit and any unamortized actuarial losses attributable to the portion of the projected benefit obligation being satisfied.

The Fund’s policy is to contribute annually to the plans those amounts that can be deducted for federal income tax purposes, plus additional amounts as the Fund deems appropriate in order to provide assets sufficient to meet benefits to be paid to plan participants. The Fund contributed $0 to the qualified plan and $48,020 to the nonqualified plan in 2013 and anticipates making contributions of $98,457 to the nonqualified plan in 2014.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The Fund uses a December 31 measurement date for its plans. Details in aggregate for the plans were as follows:


	2013			2012
Change in benefit obligation
Benefit obligation at beginning of year	$	7,224,455		$	6,847,353
Interest cost		219,235			235,120
Actuarial loss		68,167			593,010
Benefits paid		(90,838	)		(74,025	)
Effect of settlement (non-recurring)		(2,200,177	)		(377,003	)
Benefit obligation at end of year	$	5,220,842		$	7,224,455


	2013			2012
Change in qualified plan assets
Fair value of qualified plan assets at beginning of year	$	6,490,137		$	4,415,557
Actual return on plan assets		263,277			494,400
Employer contributions		—			2,000,000
Benefits paid		(42,817	)		(42,817	)
Settlement (non-recurring)		(2,200,177	)		(377,003	)
Fair value of qualified plan assets at end of year	$	4,510,420		$	6,490,137
Funded status	$	(710,422	)	$	(734,318	)

The accumulated benefit obligation for all defined benefit pension plans was $5,220,842 and $7,224,455 at December 31, 2013 and 2012, respectively.

The primary investment objective of the Fund’s qualified pension plan assets is capital preservation, achieved through a portfolio of mutual funds and pooled separate accounts (“PSA”). PSAs, like mutual funds, are made up of a wide variety of underlying investments in securities. The Fund’s targeted asset allocation for 2014 is to maintain approximately 60% of plan assets invested in short-term fixed income securities and approximately 40% of plan assets invested in cash and money market securities. In 2013, the plan sold 26,271 shares of The Adams Express Company stock (an affiliated company) to The Adams Express Company for proceeds of $330,489, based on the closing market price on the date of the transaction.

The net asset value of mutual funds and PSAs are based on the fair value of its underlying investments. The fair value of the plan assets is determined using various inputs, summarized into the three levels described in footnote 1. The plan assets at December 31, 2013 were classified as follows:


	Level 1		Level 2		Level 3		Total
Fixed income securities	$	—	$	2,689,450	$	—	$	2,689,450
Money market securities		1,817,402		3,568		—		1,820,970
Total	$	1,817,402	$	2,693,018	$	—	$	4,510,420

Items impacting the Fund’s net investment income and accumulated other comprehensive income were:


	2013			2012
Components of net periodic pension cost
Interest cost	$	219,235			235,120
Expected return on plan assets		(206,382	)		(221,440	)
Net loss component		278,362			304,998
Effect of settlement (non-recurring)		641,408			112,241
Net periodic pension cost	$	932,623		$	430,919


	2013			2012
Accumulated other comprehensive income
Defined benefit pension plans:
Balance at beginning of year	$	(1,942,503	)	$	(2,033,685	)
Net actuarial loss arising during period		(20,621	)		(326,057	)
Reclassifications to net periodic pension cost:
Amortization of net loss		278,362			304,998
Effect of settlement (non-recurring)		641,408			112,241
Balance at end of year	$	(1,043,354	)	$	(1,942,503	)

Accumulated other comprehensive income was comprised of net actuarial losses of $(1,043,354) and $(1,942,503) at December 31, 2013 and 2012, respectively. In 2014, the Fund estimates that $96,519 of net losses will be amortized from accumulated other comprehensive income into net periodic pension cost. Any remaining net losses will be recognized upon termination of the plans.

Assumptions used to determine benefit obligations were:


	2013			2012
Discount rate		3.82	%		3.64	%
Rate of compensation increase		—			—

The assumptions used to determine net periodic pension cost were:


	2013			2012
Discount rate		3.62	%		4.00	%
Expected long-term return on plan assets		4.00	%		6.50	%
Rate of compensation increase		—			—

The assumption used to determine expected long-term return on plan assets was based on historical and future expected returns of multiple asset classes in order to develop a risk-free real rate of return and risk premiums for each asset class. The overall rate for each asset class was developed by combining a long-term inflation component, the risk-free real rate of return, and the associated risk premium. A weighted average rate was developed based on those overall rates and the target asset allocation of the plan.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The following benefit payments are eligible to be paid in the years indicated:


	Pension Benefits
2014	$	628,000
2015		161,000
2016		156,000
2017		2,000,000
2018		413,000
Years 2019-2023		870,000

6. EQUITY-BASED COMPENSATION

The 2005 Equity Incentive Compensation Plan (“2005 Plan”), adopted at the 2005 Annual Meeting and re-approved at the 2010 Annual Meeting, permits the grant of restricted stock awards (both performance and nonperformance-based), as well as stock options and other stock incentives, to all employees and non-employee directors. Performance-based restricted stock awards vest at the end of a specified three year period, with the ultimate number of shares earned contingent on achieving certain performance targets. If performance targets are not achieved, all or a portion of the performance-based restricted shares are forfeited and become available for future grants. Nonperformance-based restricted stock awards typically vest ratably over a three year period and nonperformance-based restricted stock units (granted to non-employee directors) vest over a one year period. Payment of awards may be deferred, if elected. The 2005 Plan provides for accelerated vesting in the event of death or retirement. Non-employee directors also may elect to defer a portion of their cash compensation, with such deferred amount to be paid by delivery of deferred stock units. Outstanding awards were granted at fair market value on grant date. The 2005 Plan provides for the issuance of up to 872,639 shares of the Fund’s Common Stock, of which 751,783 shares remain available for future grants at December 31, 2013.

A summary of the status of the Fund’s awards granted under the 2005 Plan as of December 31, 2013, and changes during the year then ended is presented below:


Awards	Shares/ Units			Weighted Average Grant-Date Fair Value
Balance at December 31, 2012		53,957		$	27.09
Granted:
Restricted stock		36,301			25.76
Restricted stock units		2,800			25.81
Deferred stock units		2,810			25.89
Vested & issued		(19,177	)		25.78
Forfeited		(14,963	)		25.61
Balance at December 31, 2013 (includes 21,734 performance-based awards and 39,994 nonperformance-based awards)		61,728		$	27.41

Compensation cost resulting from awards granted under the 2005 Plan are based on the fair value of the award on grant date (determined by the average of the high and low price on grant date) and recognized on a straight-line basis over the requisite service period. For those awards with performance conditions, compensation cost is based on the most probable outcome and, if such goals are not met, compensation cost is not recognized and any previously recognized compensation cost is reversed. The total compensation cost for restricted stock granted to employees for the year ended December 31, 2013 was $308,647. The total compensation cost for restricted stock units granted to non-employee directors for the year ended December 31, 2013 was $74,466. As of December 31, 2013, there was total unrecognized compensation cost of $607,832, a component of additional capital surplus, related to nonvested equity-based compensation arrangements granted under the 2005 Plan. That cost is expected to be recognized over a weighted average period of 1.53 years. The total fair value of shares and units vested and issued during the year ended December 31, 2013 was $484,953.

The Stock Option Plan of 1985 (“1985 Plan”) has been discontinued and, as of December 31, 2013, there were no remaining grants of stock options and stock appreciation rights outstanding.

A summary of option activity under the 1985 Plan as of December 31, 2013, and changes during the year then ended, is presented below:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Life (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2012		4,344		$	6.42		1.00
Exercised		(4,344	)	$	6.42		—	$	86,728
Outstanding at December 31, 2013		—			—		—		—

Compensation cost resulting from stock options and stock appreciation rights granted under the 1985 Plan is based on the intrinsic value of the award, recognized over the award’s vesting period, and remeasured at each reporting date through the date of settlement. The total compensation cost recognized for the year ended December 31, 2013 was $10,686.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. OFFICER AND DIRECTOR COMPENSATION

The aggregate remuneration paid during the year ended December 31, 2013 to officers and directors amounted to $2,764,400, of which $345,951 was paid as fees to directors who were not officers. These amounts represent the taxable income to the Fund’s officers and directors and therefore differ from the amounts reported in the accompanying Statement of Operations that are recorded and expensed in accordance with generally accepted accounting principles.

8. PORTFOLIO SECURITIES LOANED

The Fund makes loans of securities to approved brokers to earn additional income. It receives as collateral cash deposits, U.S. Government securities, or bank letters of credit valued at 102% of the value of the securities on loan. The market value of the loaned securities is calculated based upon the most recent closing prices and any additional required collateral is delivered to the Fund on the next business day. Cash deposits are placed in a registered money market fund. The Fund 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 Fund also continues to receive interest or dividends on the securities loaned. 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 Fund. At December 31, 2013, the Fund had securities on loan of $7,805,282 and held cash collateral of $7,980,044. The Fund is indemnified by the Custodian, serving as lending agent, for loss of loaned securities and has the right under the lending agreement to recover the securities from the borrower on demand.

9. OPERATING LEASE COMMITMENTS

The Fund leases office space and equipment under operating lease agreements expiring at various dates through the year 2019. The Fund recognized rental expense of $106,878 in 2013, and its minimum rental commitments are as follows:


2014	$	137,692
2015		142,040
2016		89,786
2017		41,018
2018 & 2019		45,649
Total	$	456,185

FINANCIAL HIGHLIGHTS


	Year Ended December 31,
	2013		2012		2011		2010		2009
Per Share Operating Performance
Net asset value, beginning of year		$27.84		$28.58		$30.73		$26.75		$22.49
Net investment income		0.44		0.48		0.41		0.35		0.28
Net realized gains and increase (decrease) in unrealized appreciation		5.93		0.48		(0.42)		4.97		5.37
Change in accumulated other comprehensive income (note 5)		0.03		—		(0.03)		0.01		0.10
Total from investment operations		6.40		0.96		(0.04)		5.33		5.75

Less distributions
Dividends from net investment income		(0.46)		(0.42)		(0.39)		(0.32)		(0.37)
Distributions from net realized gains		(1.42)		(1.18)		(1.58)		(0.95)		(1.03)
Total distributions		(1.88)		(1.60)		(1.97)		(1.27)		(1.40)
Capital share repurchases		0.05		—		—		—		0.02
Reinvestment of distributions		(0.15)		(0.10)		(0.14)		(0.08)		(0.11)
Total capital share transactions		(0.10)		(0.10)		(0.14)		(0.08)		(0.09)
Net asset value, end of year		$32.26		$27.84		$28.58		$30.73		$26.75
Market price, end of year		$27.38		$23.92		$24.48		$27.01		$23.74

Total Investment Return
Based on market price		22.7%		4.3%		(2.3)%		19.6%		30.3%
Based on net asset value		24.2%		4.0%		0.3%		20.8%		26.7%

Ratios/Supplemental Data
Net assets, end of year (in 000’s)		$863,690		$732,988		$732,811		$761,736		$650,718
Ratio of expenses to average net assets*		0.78%		0.65%		0.56%		0.64%		0.96%
Ratio of net investment income to average net assets**		1.44%		1.67%		1.29%		1.32%		1.18%
Portfolio turnover		18.7%		11.7%		16.4%		16.8%		14.4%
Number of shares outstanding at end of year (in 000’s)		26,775		26,326		25,641		24,790		24,327

The ratios of expenses to average net assets were 0.70%, 0.64%, and 0.78% in 2013, 2012, and 2009, respectively, after adjusting for non-recurring pension expenses as described in footnote 5.

The ratios of net investment income to average net assets were 1.52%, 1.68%, and 1.36% in 2013, 2012, and 2009, respectively, after adjusting for non-recurring pension expenses as described in footnote 5.

SCHEDULE OF INVESTMENTS

December 31, 2013


	Shares		Value (A)
Common Stocks — 100.1%
Energy — 79.5%
*Exploration & Production — 25.8%*
Anadarko Petroleum Corp.		300,000	$	23,796,000
Cabot Oil & Gas Corp.		330,000		12,790,800
ConocoPhillips		275,000		19,428,750
Devon Energy Corp. (E)		79,000		4,887,730
Energen Corp. (E)		175,000		12,381,250
EOG Resources, Inc.		175,000		29,372,000
EQT Corp.		160,000		14,364,800
Marathon Oil Corp.		396,000		13,978,800
Newfield Exploration Co. (C)		270,000		6,650,100
Noble Energy, Inc.		305,000		20,773,550
Oasis Petroleum, Inc. (C)		150,000		7,045,500
Occidental Petroleum Corp.		405,000		38,515,500
Pioneer Natural Resources Co.		75,000		13,805,250
QEP Resources, Inc. (with attached rights)		165,000		5,057,250

				222,847,280

*Integrated Oil & Gas — 30.8%*
Chevron Corp.		763,200		95,331,312
Exxon Mobil Corp. (E)(F)		1,483,430		150,123,116
Hess Corp.		250,000		20,750,000

				266,204,428

*Pipelines — 2.2%*
Kinder Morgan Inc.		250,000		9,000,000
Williams Companies, Inc.		250,000		9,642,500

				18,642,500

*Refiners — 3.7%*
HollyFrontier Corp.		110,000		5,465,900
Phillips 66		345,275		26,631,061

				32,096,961

*Services — 17.0%*
Baker Hughes, Inc.		60,000		3,315,600
FMC Technologies, Inc. (C)		150,000		7,831,500
Halliburton Co.		493,870		25,063,903
Nabors Industries Ltd.		319,000		5,419,810
National Oilwell Varco, Inc. (E)		200,000		15,906,000
Oil States International Inc. (C)(E)		100,000		10,172,000
Schlumberger Ltd.		625,000		56,318,750
Seadrill Ltd. (B)		200,003		8,216,123
Transocean Ltd. (C)		170,000		8,401,400
Weatherford International, Ltd. (C)		400,000		6,196,000

				146,841,086

SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2013


	Principal/ Shares		Value (A)
Basic Materials — 19.7%
*Chemicals — 16.5%*
CF Industries Holdings, Inc. (E)		84,069	$	19,591,440
Dow Chemical Co.		547,500		24,309,000
Eastman Chemical Co.		166,000		13,396,200
E.I. du Pont de Nemours and Co. (E)		125,000		8,121,250
FMC Corp.		100,000		7,546,000
LyondellBasell Industries N.V. (Class A)		345,000		27,696,600
Monsanto Co.		194,400		22,657,320
Praxair, Inc.		150,000		19,504,500

				142,822,310

*Gold & Precious Metals — 0.6%*
SPDR Gold Trust (C)(E)		45,000		5,227,650

*Industrial Metals — 2.1%*
Freeport-McMoRan Copper & Gold Inc.		487,000		18,379,380

*Mining — 0.5%*
Peabody Energy Corp		202,440		3,953,653

Utilities — 0.9%
National Fuel Gas Co. (E)		100,000		7,140,000


Total Common Stocks (Cost $461,286,486)				864,155,248

Short-Term Investments — 0.1%
Money Market Account — 0.1%
M&T Bank, 0.15%	$	735,740		735,740

Money Market Funds — 0.0%
Fidelity Institutional Money Market - Money Market Portfolio (Institutional Class), 0.07% (D)		100,000		100,000
RBC U.S. Government Money Market (Institutional Class I), 0.01% (D)		10,000		10,000
Vanguard Federal Money Market, 0.01% (D)		10,000		10,000
Western Asset Institutional Government Reserves (Institutional Class), 0.04% (D)		10,000		10,000

				130,000


Total Short-Term Investments (Cost $865,740)				865,740

SCHEDULE OF INVESTMENTS (CONTINUED)

December 31, 2013


	Shares		Value (A)
Securities Lending Collateral — 0.9%
(Cost $7,980,044)
*Money Market Funds 0.9%*
Invesco Short-Term Investment Trust - Liquid Assets Portfolio (Institutional Class), 0.07% (D)		7,980,044	$	7,980,044


Total Investments — 101.1% (Cost $470,132,270)				873,001,032
Cash, receivables, prepaid expenses and other assets, less liabilities - (1.1)%				(9,311,199	)

Net Assets — 100.0%			$	863,689,833

Notes:

(A)

Common stocks are listed on the New York Stock Exchange or the NASDAQ and are valued at the last reported sale price on the day of valuation. See note 1 to financial statements.

(B)

A portion of shares held are on loan. See note 8 to financial statements.

(C)

Presently non-dividend paying.

(D)

Rate presented is as of period-end and represents the annualized yield earned over the previous seven days.

(E)

All or a portion of this security is pledged to cover open written call option contracts. Aggregate market value of such pledged securities is $44,371,430.

(F)

All or a portion of this security is pledged to collateralize open written put option contracts with an aggregate market value to deliver upon exercise of $30,400,000.

CHANGES IN PORTFOLIO SECURITIES

The unaudited list of quarterly changes in the Fund’s portfolio securities can be found on the Fund’s website at www.peteres.com under “Investment Information”.

SCHEDULE OF OUTSTANDING WRITTEN OPTION CONTRACTS

December 31, 2013


Contracts (100 shares each)		Security	Strike Price	Contract Expiration Date	Value

	COVERED CALLS
	400	CF Industries Holdings, Inc.	$ 240	Jan 14	$	83,600
	790	Devon Energy Corp.	65	Jan 14		18,960
	500	E.I. du Pont de Nemours and Co.	62.50	Jan 14		138,500
	300	Energen Corp.	90	Jan 14		6,000
	750	Exxon Mobil Corp.	95	Jan 14		487,500
	500	Exxon Mobil Corp.	95	Apr 14		360,000
	500	National Fuel Gas Co.	70	Jan 14		107,500
	500	Oil States International Inc.	130	Mar 14		15,000
	150	SPDR Gold Trust	145	Feb 14		1,200
	150	SPDR Gold Trust	143	Mar 14		3,000

	4,540					1,221,260


	COLLATERALIZED PUTS
	500	Baker Hughes, Inc.	50	Apr 14		56,500
	400	CF Industries Holdings, Inc.	170	Jan 14		6,400
	250	EOG Resources, Inc.	150	Jan 14		5,000
	500	Exxon Mobil Corp.	77.50	Jan 14		1,500
	500	Exxon Mobil Corp.	75	Apr 14		6,500
	500	HollyFrontier Corp.	39.50	Jan 14		2,500
	500	LyondellBasell Industries N.V. (Class A)	65	Jan 14		5,000
	500	Oil States International Inc.	90	Mar 14		82,500

	3,650					165,900

		Total Option Liability (Unrealized Loss of $385,018)			$	1,387,160

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Petroleum & Resources Corporation:

In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Petroleum & Resources Corporation (the Fund) at December 31, 2013, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2013 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Baltimore, Maryland

February 14, 2014

HISTORICAL FINANCIAL STATISTICS

(unaudited)


Year	Value of Net Assets		Shares Outstanding*		Net Asset Value Per Share*		Market Value Per Share*		Income Dividends Per Share*		Capital Gains Distributions Per Share*		Total Dividends and Distributions Per Share*		Annual Distribution Rate**
1999	$	565,075,001		21,471,270	$	26.32	$	21.50	$	.48	$	1.07	$	1.55		7.1	%
2000		688,172,867		21,053,644		32.69		27.31		.39		1.35		1.74		6.9
2001		526,491,798		21,147,563		24.90		23.46		.43		1.07		1.50		5.6
2002		451,275,463		21,510,067		20.98		19.18		.43		.68		1.11		5.1
2003		522,941,279		21,736,777		24.06		23.74		.38		.81		1.19		5.8
2004		618,887,401		21,979,676		28.16		25.78		.44		.88		1.32		5.4
2005		761,913,652		21,621,072		35.24		32.34		.56		1.22		1.78		5.9
2006		812,047,239		22,180,867		36.61		33.46		.47		3.33		3.80		11.2
2007		978,919,829		22,768,250		42.99		38.66		.49		3.82		4.31		11.6
2008		538,936,942		23,958,656		22.49		19.41		.38		2.61		2.99		8.9
2009		650,718,323		24,327,307		26.75		23.74		.37		1.03		1.40		6.6
2010		761,735,503		24,789,698		30.73		27.01		.32		.95		1.27		5.5
2011		732,810,692		25,641,018		28.58		24.48		.39		1.58		1.97		7.1
2012		732,988,462		26,325,601		27.84		23.92		.42		1.18		1.60		6.4
2013		863,689,833		26,775,228		32.26		27.38		.46		1.42		1.88		7.2

Adjusted for 3-for-2 stock split effected in October 2000.

The annual distribution rate is the total dividends and capital gain distributions during the year divided by the average month-end market price of the Fund’s Common Stock for the calendar year in years prior to 2012 and for the twelve months ended October 31 beginning in 2012, which is consistent with the calculation to determine the annual minimum distribution rate commitment announced in September 2012.

PETROLEUM & RESOURCES CORPORATION

(unaudited)



Calendar year- end	Market value of original investment		Cumulative market value of shares from capital gains distributions		Cumulative market value of shares from income dividends		Total market value		Net asset value of total shares
1999	$	10,501	$	564	$	227	$	11,292	$	13,823
2000		13,338		1,513		508		15,359		18,384
2001		11,458		1,918		648		14,024		14,885
2002		9,367		1,970		759		12,096		13,231
2003		11,595		3,011		1,207		15,813		16,026
2004		12,591		3,862		1,632		18,085		19,754
2005		15,795		5,683		2,443		23,921		26,066
2006		16,342		8,350		2,871		27,563		30,158
2007		18,881		12,908		3,726		35,515		39,493
2008		9,480		8,959		2,084		20,523		23,780
2009		11,595		12,144		2,993		26,732		30,121
2010		13,192		14,942		3,832		31,966		36,368
2011		11,956		15,391		3,890		31,237		36,469
2012		11,682		16,554		4,331		32,567		37,906
2013		13,372		20,971		5,605		39,948		47,068

ILLUSTRATION OF AN ASSUMED 15 YEAR INVESTMENT OF $10,000

Investment income dividends and capital gains distributions are taken in additional shares. This chart covers the years 1999–2013. Fees for the reinvestment of interim dividends are assumed as 2% of the amount reinvested (maximum of $2.50) and commissions of $0.05 per share. There is no charge for reinvestment of year-end distributions. No adjustment has been made for any income taxes payable by shareholders on income dividends, capital gains distributions, or the sale of any shares. These results should not be considered representative of the dividend income or capital gain or loss which may be realized in the future.

LOGO

SHAREHOLDER INFORMATION AND SERVICES

DIVIDEND PAYMENT SCHEDULE

The Fund presently pays dividends four times a year, as follows: (a) three interim distributions on or about March 1, June 1, and September 1, and (b) a “year-end” distribution, payable in late December, consisting of the estimated balance of the net investment income for the year, the net realized capital gain earned through October 31 and, if applicable, a return of capital. Shareholders may elect to receive the year-end distribution in stock or cash. In connection with this distribution, all shareholders of record are sent a dividend announcement notice and an election card in mid-November. Shareholders holding shares in “street” or brokerage accounts may make their election by notifying their brokerage house representative.

INVESTORS CHOICE

INVESTORS CHOICE is a direct stock purchase and sale plan, as well as a dividend reinvestment plan, sponsored and administered by our transfer agent, American Stock Transfer & Trust Corporation (AST). The Plan provides registered shareholders and interested first time investors an affordable alternative for buying, selling, and reinvesting in Fund shares. A brochure which further details the benefits and features of INVESTORS CHOICE as well as an enrollment form may be obtained by contacting AST.

The costs to participants in administrative service fees and brokerage commissions for each type of transaction are listed below. Fees are subject to change at any time.

Fees:

Initial Enrollment and Optional Cash Investments:

Service Fee $2.50 per investment

Brokerage Commission $0.05 per share

Reinvestment of Dividends*:

Service Fee 2% of amount invested

(maximum of $2.50 per investment)

Brokerage Commission $0.05 per share

Sale of Shares:

Service Fee $10.00

Brokerage Commission $0.05 per share

Deposit of Certificates for safekeeping $7.50

(waived if sold)

Book to Book Transfers Included

To transfer shares to another participant or to a new participant

* The year-end dividend and capital gain distribution will usually be made in newly issued shares of Common Stock. There are no fees or commissions in connection with this dividend and capital gain distribution when made in newly issued shares.

Minimum and Maximum Cash Investments:

Initial minimum investment (non-holders) $500

Minimum optional investment (existing holders) $50

Electronic Funds Transfer (monthly minimum) $50

Maximum per transaction $25,000

Maximum per year NONE

INVESTORS CHOICE Mailing Address:

Attention: Dividend Reinvestment

P.O. Box 922

Wall Street Station

New York, NY 10269-0560

Website: www.amstock.com

E-mail: info@amstock.com

For shareholders whose stock is held by a broker in “street” name, the AST INVESTORS CHOICE Direct Stock Purchase and Sale Plan remains available through many registered investment security dealers. If your shares are currently held in a “street” name or brokerage account, please contact your broker for details about how you can participate in AST’s Plan or contact AST.

ELECTRONIC DELIVERY OF SHAREHOLDER REPORTS

The Fund offers shareholders the benefits and convenience of viewing Quarterly and Annual Reports and other shareholder materials on-line. With your consent, paper copies of these documents will cease with the next mailing and will be provided via e-mail. Reduce paper mailed to your home and help lower the Fund’s printing and mailing costs. To enroll, please visit the following websites:

Registered shareholders with AST: www.amstock.com/main

Shareholders using brokerage accounts: http://enroll.icsdelivery.com/PEO

BOARD OF DIRECTORS

Personal
Information

Position
Held with
the Fund

Term
of
Office

Length
of Time
Served

Principal Occupations

Number of
Portfolios
in Fund
Complex
Overseen
by Director

Other
Directorships

Independent Directors

Enrique R. Arzac, Ph.D.
7 St. Paul Street,
Suite 1140
Baltimore, MD 21202
Age 72

Director

One Year

Since
1987

Professor of Finance and Economics at the Graduate School of Business, Columbia University, formerly Vice Dean of Academic Affairs.

Two

Director of The Adams Express Company (closed-end fund), Aberdeen Asset Management Funds (6 closed-end funds), Credit Suisse Asset Management Funds (2 closed-end funds and 9 open-end funds), and Mirae Asset Discovery Funds (6 open-end funds). In addition, within the past five years, Dr. Arzac served as a director of Epoch Holdings Corporation (an investment management and investment advisory services company) and Starcomms Plc (telecommunications company).

Phyllis O. Bonanno

7 St. Paul Street,

Suite 1140

Baltimore, MD 21202

Age 70

Director

One Year

Since
2003

Retired President & CEO of International Trade Solutions, Inc. (consultants). Formerly, President of Columbia College, Columbia, South Carolina, and Corporate Vice President of Warnaco, Inc. (apparel).

Two

Director of The Adams Express Company (closed-end fund) and Borg-Warner Inc. (industrial). In addition, within the past five years, Ms. Bonanno served as a director of Mohawk Industries, Inc. (carpets and flooring).

Kenneth J. Dale

7 St. Paul Street,

Suite 1140

Baltimore, MD 21202

Age 57

Director

One Year

Since 2008

Senior Vice President and Chief Financial Officer of The Associated Press. Formerly, Vice President, JPMorgan Chase & Co. Inc.

Two

Director of The Adams Express Company (closed-end fund).

Frederic A. Escherich

7 St. Paul Street,
Suite 1140
Baltimore, MD 21202
Age 61

Director

One Year

Since
2006

Private Investor. Formerly, Managing Director and head of Mergers and Acquisitions Research and the Financial Advisory Department with JPMorgan & Co. Inc.

Two

Director of The Adams Express Company (closed-end fund).

Roger W. Gale, Ph.D.
7 St. Paul Street,
Suite 1140
Baltimore, MD 21202
Age 67

Director

One Year

Since

2005

President & CEO of GF Energy, LLC (consultants to electric power companies). Formerly, member of management group of PA Consulting Group (energy consultants).

Two

Director of The Adams Express Company (closed-end fund) and during the past five years also served as a director of Ormat Technologies, Inc. (geothermal and renewable energy).

BOARD OF DIRECTORS (CONTINUED)

Personal
Information

Position
Held with the
Fund

Term
of
Office

Length
of Time
Served

Principal Occupations

Number of
Portfolios
in Fund
Complex
Overseen
by Director

Other
Directorships

Independent Directors (continued)

Kathleen T. McGahran,
Ph.D., J.D., CPA

7 St. Paul Street,

Suite 1140

Baltimore, MD 21202

Age 63

Director, Chair of the Board

One Year

Since 2003

President & CEO of Pelham Associates, Inc. (an executive education provider) and Senior Lecturer at Yale University’s School of Management. Formerly, Associate Dean & Director of Executive Education and Associate Professor, Columbia University, and Adjunct Associate Professor, Stern School of Business, New York University and Tuck School of Business, Dartmouth College.

Two

Director of The Adams Express Company (closed-end fund).

Craig R. Smith, M.D.
7 St. Paul Street,
Suite 1140
Baltimore, MD 21202
Age 67

Director

One Year

Since

2005

Chief Operating Officer and Manager of Algenol LLC (ethanol manufacturing). Formerly, President, Williston Consulting LLC (consultants to pharmaceutical and biotechnology industries) and Chairman, President & CEO of Guilford Pharmaceuticals (pharmaceuticals and biotechnology).

Two

Director of The Adams Express Company (closed-end fund) and during the past five years also served as a director of LaJolla Pharmaceutical Company, Depomed, Inc. (specialty pharmaceuticals), and Algenol Biofuels, Inc. (ethanol manufacturing).

Interested Director

Mark E. Stoeckle
7 St. Paul Street,
Suite 1140
Baltimore, MD 21202
Age 57

Director and
CEO

One Year

Since 2013

CEO of the Fund and CEO of The Adams Express Company.

Two

Director of The Adams Express Company (closed-end fund).

This report, including the financial statements herein, is transmitted to the shareholders of Petroleum & Resources Corporation for their information. It is not a prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in the report. The rates of return will vary and the principal value of an investment will fluctuate. Shares, if sold, may be worth more or less than their original cost. Past performance is no guarantee of future investment results.

OTHER INFORMATION

STATEMENT ON QUARTERLY FILING OF COMPLETE PORTFOLIO SCHEDULE

In addition to publishing its complete schedule of portfolio holdings in the First and Third Quarter Reports to shareholders, the Fund also files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room, and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund also posts a link to its Forms N-Q on its website: www.peteres.com under the headings “Investment Information”, “Financial Reports” and then “SEC Filings”.

ANNUAL CERTIFICATION

The Corporation’s CEO has submitted to the New York Stock Exchange the annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual.

PROXY VOTING POLICIES AND RECORD

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities owned by the Fund and the Fund’s proxy voting record for the 12-month period ended June 30, 2013 are available (i) without charge, upon request, by calling the Fund’s toll free number at (800) 638-2479; (ii) on the Fund’s website: www.peteres.com under the headings “About Petroleum & Resources” and “Corporate Information”; and (iii) on the Securities and Exchange Commission’s website: www.sec.gov.

FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Fund’s actual results are the performance of the portfolio of stocks held by the Fund, the conditions in the U.S. and international financial, petroleum and other markets, the price at which shares of the Fund will trade in the public markets, and other factors discussed in the Fund’s periodic filings with the Securities and Exchange Commission.

PRIVACY POLICY

In order to conduct its business, the Fund, through its transfer agent, American Stock Transfer & Trust Company, collects and maintains certain nonpublic personal information about our shareholders of record with respect to their transactions in shares of our securities. This information includes the shareholder’s address, tax identification or Social Security number, share balances, and dividend elections. We do not collect or maintain personal information about shareholders whose shares of our securities are held in “street name” by a financial institution such as a bank or broker.

We do not disclose any nonpublic personal information about you, our other shareholders or our former shareholders to third parties unless necessary to process a transaction, service an account or as otherwise permitted by law.

To protect your personal information internally, we restrict access to nonpublic personal information about our shareholders to those employees who need to know that information to provide services to our shareholders. We also maintain certain other safeguards to protect your nonpublic personal information.

PETROLEUM & RESOURCES CORPORATION

Board Of Directors

Enrique R. Arzac ^1,3,5

Phyllis O. Bonanno ^1,3,5

Kenneth J. Dale ^2,4

Frederic A. Escherich ^1,4,5

Roger W. Gale ^2,4

Kathleen T. McGahran ^1,2,3,5,6

Craig R. Smith ^3,5

Mark E. Stoeckle ¹

Member of Executive Committee

Member of Audit Committee

Member of Compensation Committee

Member of Retirement Benefits Committee

Member of Nominating and Governance Committee

Chair of the Board

Officers


Mark E. Stoeckle		Chief Executive Officer

Nancy J.F. Prue, CFA		President

James P. Haynie, CFA		Executive Vice President

Brian S. Hook, CFA, CPA		Vice President, Chief Financial Officer and Treasurer

Lawrence L. Hooper, Jr.		Vice President, General Counsel and Secretary

Michael A. Kijesky, CFA		Vice President — Research

Christine M. Sloan, CPA		Assistant Treasurer

Petroleum & Resources Corporation

Seven St. Paul Street, Suite 1140, Baltimore, MD 21202

(410) 752-5900 (800) 638-2479

Website: www.peteres.com

E-mail: contact@peteres.com

Counsel: Chadbourne & Parke LLP

Independent Registered Public Accounting Firm: PricewaterhouseCoopers LLP

Custodian of Securities: Brown Brothers Harriman & Co.

Transfer Agent & Registrar: American Stock Transfer & Trust Company, LLC

Stockholder Relations Department

6201 15th Avenue

Brooklyn, NY 11219

(866) 723-8330

Website: www.amstock.com

E-mail: info@amstock.com

LOGO

Petroleum & Resources Corporation

Seven St. Paul Street

Suite 1140

BALTIMORE , MD 21202

(410) 752-5900 or (800) 638-2479

www.peteres.com

Item 2. Code of Ethics.

On June 12, 2003, the Board of Directors adopted a code of ethics that applies to the registrant's principal executive officer and principal financial officer. The code of ethics is available on the registrant's website at: www.peteres.com. Since the code of ethics was adopted, there have been no amendments to it nor have any waivers from any of its provisions been granted.

Item 3. Audit Committee Financial Expert.

The Board of Directors has determined that at least one of the members of the registrant's audit committee meets the definition of audit committee financial expert as that term is defined by the Securities and Exchange Commission. The directors on the registrant's audit committee whom the Board of Directors has determined meet such definition are Kenneth J. Dale and Kathleen T. McGahran, who are independent pursuant to paragraph (a)(2) of this Item.

Item 4. Principal Accountant Fees and Services.

(a) Audit Fees. The aggregate fees for professional services rendered by the registrant's independent registered public accounting firm, PricewaterhouseCoopers LLP, for the audit of the registrant's annual financial statements and review of the registrant's semi-annual financial statements for 2013 and 2012 were $63,677 and $61,052, respectively.

(b) Audit-Related Fees. There were no audit-related fees in 2013 and 2012.

(c) Tax Fees. The aggregate fees for professional services rendered to the registrant by PricewaterhouseCoopers LLP for the review of the registrant's excise tax calculations and preparations of federal, state and excise tax returns for 2013 and 2012 were $7,492 and $6,588, respectively.

(d) All Other Fees. The aggregate fees for services rendered to the registrant by PricewaterhouseCoopers LLP, other than for the services referenced above, for 2013 and 2012 were $5,477 and $6,617, respectively, which related to the review of the registrant's procedures for calculating the amounts to be paid or granted to the registrant's officers in accordance with the registrant's cash incentive plan and the 2005 Equity Incentive Compensation Plan, review of the registrant's calculations related to those plans, and preparation of a related report to the registrant's Compensation Committee. Services in 2012 also included the review of the documentation relating to compliance by the registrant's employees and directors with the requirements of the registrant's Code of Ethics pertaining to personal stock trading, and presentation of a related report to the Chief Executive Officer.

(e)	(1)	Audit Committee Pre-Approval Policy. The audit committee's policy is to pre-approve all audit and permissible non-audit services provided by the independent accountants. In assessing requests for services by the independent accountants, the audit committee considers whether such services are consistent with the auditor's independence; whether the independent accountants are likely to provide the most effective and efficient service based upon their familiarity with the registrant; and whether the service could enhance the registrant's ability to manage or control risk or improve financial statement audit and review quality. The audit committee may delegate pre-approval authority to its Chair. Any pre-approvals by the Chair under this delegation are to be reported to the audit committee at its next scheduled meeting. All services performed in 2013 were pre-approved by the audit committee.
	(2)	Not applicable.

(f) Not applicable.

(g) The aggregate fees for non-audit professional services rendered by PricewaterhouseCoopers LLP to the registrant for 2013 and 2012 were $12,969 and $13,205, respectively.

(h) The registrant's audit committee has considered the provision by PricewaterhouseCoopers LLP of the non-audit services described above and found that they are compatible with maintaining PricewaterhouseCoopers LLP's independence.

Item 5. Audit Committee of Listed Registrants.

(a) The registrant has a standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the audit committee are: Kenneth J. Dale, Chair, Roger W. Gale, Kathleen T. McGahran, and Craig R. Smith.

(b) Not applicable.

Item 6. Investments.

(a) This schedule is included as part of the Report to Stockholders filed under Item 1 of this form.

(b) Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

PROXY VOTING GUIDELINES

Petroleum & Resources Corporation ("Petroleum") follows long-standing general guidelines for the voting of portfolio company proxies and takes very seriously its responsibility to vote all such proxies. The portfolio company proxies are evaluated by our research staff and voted by our portfolio management team, and we annually provide the Board of Directors with a report on how proxies were voted during the previous year. We do not use an outside service to assist us in voting our proxies.

As an internally-managed investment company, Petroleum uses its own staff of research analysts and portfolio managers. In making the decision to invest in a company for the portfolio, among the factors the research team analyses is the integrity and competency of the company's management. We must be satisfied that the companies we invest in are run by managers with integrity. Therefore, having evaluated this aspect of our portfolio companies' managements, we give significant weight to the recommendations of the company's management in voting on proxy issues.

We vote proxies on a case-by-case basis according to what we deem to be the best long-term interests of our shareholders. The key over-riding principle in any proxy vote is that stockholders be treated fairly and equitably by the portfolio company's management. In general, on the election of directors and on routine issues that we do not believe present the possibility of an adverse impact upon our investment, after reviewing whether applicable corporate governance requirements as to board and committee composition have been met, we will vote in accordance with the recommendations of the company's management. When we believe that the management's recommendation is not in the best interests of our stockholders, we will vote against that recommendation.

Our general guidelines for when we will vote contrary to the recommendation of the portfolio company management's recommendation are:

Stock Options

Our general guideline is to vote against stock option plans that we believe are unduly dilutive of our stock holdings in the company. We use a general guideline that we will vote against any stock option plan that results in dilution in shares outstanding exceeding 4%. Most stock option plans are established to motivate and retain key employees and to reward them for their achievement. An analysis of a stock option plan cannot be made in a vacuum but must be made in the context of the company's overall compensation scheme. In voting on stock option plans, we give consideration to whether the stock option plan is broad-based in the number of employees who are eligible to receive grants under the plan. We generally vote against plans that permit re-pricing of grants or the issuance of options with exercise prices below the grant date value of the company's stock.

Corporate Control/Governance Issues

Unless we conclude that the proposal is favorable to our interests as a long-term shareholder in the company, we have a long-standing policy of voting against proposals to create a staggered board of directors. In conformance with that policy, we will generally vote in favor of shareholder proposals to eliminate the staggered election of directors.

Unless we conclude that the proposal is favorable to our interests as a long-term shareholder in the company, our general policy is to vote against amendments to a company's charter that can be characterized as blatant anti-takeover provisions.

With respect to so-called golden parachutes and other severance packages, it is our general policy to vote against proposals relating to future employment contracts that provide that compensation will be paid to any director, officer or employee that is contingent upon a merger or acquisition of the company.

We generally vote for proposals to require that the majority of a board of directors consist of independent directors and vote against proposals to establish a retirement plan for non-employee directors.

We have found that most stockholder proposals relating to social issues focus on very narrow issues that either fall within the authority of the company's management, under the oversight of its board of directors, to manage the day-to-day operations of the company or concern matters that are more appropriate for global solutions rather than company- specific ones. We consider these proposals on a case-by-case basis but usually are persuaded management's position is reasonable and vote in accordance with management's recommendation on these types of proposals.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

(a)	(1) As of the date of this filing, Mark E. Stoeckle, Chief Executive Officer, Nancy J.F. Prue, President, and James P. Haynie, Executive Vice President, comprise the three-person portfolio management team for the registrant. Mr. Stoeckle has served as portfolio manager for the registrant since February 11, 2013; prior thereto, he served as Chief Investment Officer, U.S. Equities and Global Sector Funds, for BNP Paribas Investment Partners. Ms. Prue has been a member of the portfolio management team since July 2009, serving as President since March 2012 and Executive Vice President from July 2009 to March 2012; prior thereto, Ms. Prue served as Vice President for the registrant from 2005 to July 2009 and as Vice President-Research from 1986 to 2005. Mr. Haynie has been a member of the portfolio management team since August 19, 2013; prior thereto, Mr. Haynie served as Chief Investment Officer, U.S. Equities and Global Sector Funds, for BNP Paribas Investment Partners from February 2013 and was Senior Portfolio Manager at BNP Paribas Investment Partners from 2005 to 2013. Mr. Stoeckle is the lead member of the portfolio management team. Messrs. Stoeckle and Haynie and Ms. Prue receive investment recommendations from a team of research analysts and make decisions jointly about any equity transactions in the portfolio. Concurrence of the portfolio managers is required for an investment recommendation to be approved.
	(2) As of the date of this filing, Messrs. Stoeckle and Haynie and Ms. Prue also serve on the portfolio management team for the registrant's non-controlling affiliate, The Adams Express Company (Adams), a registered investment company with total net assets of $1,421,550,920 as of December 31, 2013. Mr. Stoeckle is Chief Executive Officer of Adams, Mr. Haynie is President and Ms. Prue is Executive Vice President. The registrant is a non-diversified fund focusing on the energy and natural resources sectors and Adams is a diversified fund with a different focus. There are few material conflicts of interest that may arise in connection with the portfolio management of both funds. The funds do not buy or sell securities or other portfolio holdings to or from the other, and policies and procedures are in place covering the sharing of expenses and the allocation of investment opportunities, including bunched orders and investments in initial public offerings, between the funds.
	(3) As of December 31, 2013, the registrant's portfolio managers are compensated through a three-component plan, consisting of salary, annual cash incentive compensation, and equity incentive compensation. The value of each component in any year is determined by the Compensation Committee, comprised solely of independent director members of the Board of Directors ("Committee"). The Committee has periodically employed a compensation consultant to review the plan and its components. For their first year of service in 2013, the salary amounts paid to Messrs. Stoeckle and Haynie by the registrant and Petroleum were negotiated as part of their hiring process, and their cash incentive compensation amounts were subject to contractual minimums. Upon commencing service with the registrant in 2013, Mr. Stoeckle also received a sign-on cash bonus. With the exceptions noted for Messrs. Stoeckle and Haynie, the structure and methods used as of December 31, 2013 to determine the compensation of the Portfolio Managers were as follows: Salaries are determined by using appropriate industry surveys and information about the local market as well as general inflation statistics. Cash incentive compensation is based on a combination of absolute and relative fund performance, with a three-fourths weighting for the Chief Executive Officer and a two-thirds weighting for other portfolio managers, and individual performance, with a one-fourth weighting for the Chief Executive Officer and a one-third weighting for other portfolio managers. Target incentives are set annually based on 80% of salary for the Chief Executive Officer and 60% of salary for the President and the Executive Vice President. Fund performance used in determining cash incentive compensation is measured over both a one-year period, accounting for two-thirds of the calculation, and a three-year period, which accounts for one-third. The registrant's total return on net asset value ("NAV") over each of the two periods is used to determine a base percentage of target, which is then adjusted by performance relative to the S&P 500 Index. Using these calculations, the cash incentive compensation can range from 0% to a maximum of 200% of the established target. Equity incentive compensation, based on a plan approved by shareholders in 2005 and reapproved in 2010, can take several forms. During 2013, a grant of the registrant's restricted stock was made to Ms. Prue on January 10, 2013, which vest three years after grant, but only upon the achievement of specified performance criteria. The target number of restricted shares granted to Ms. Prue will vest if, on the January 1 prior to the vest date ("measurement date"), the registrant's three-year average annual NAV total return meets or exceeds the three-year average annual total return of a hypothetical portfolio comprised of a 50/50 blend of the S&P 500 Index and the Lipper Large-Cap Core Mutual Funds Average ("Hypothetical Portfolio"). Depending on the level of registrant's outperformance or underperformance of the Hypothetical Portfolio on the measurement date, an additional number of shares, a lesser percentage, or no shares will be earned and will vest. Upon commencing service with the registrant in 2013, Mr. Stoeckle received two equity incentive sign-on grants comprised of the registrant's restricted stock, the first of which will vest one year from the date of grant and the second of which will vest in one-third tranches on each of the next three anniversaries of the grant date, provided that he remains in the registrant's employ on those dates. Upon commencing service with the registrant in 2013, Mr. Haynie received an equity incentive sign-on grant comprised of the registrant's restricted shares that will vest in one-fourth tranches on each of the next four anniversaries of the grant date, provided that he remains in the registrant's employ on those dates. As of December 31, 2013, the structure of the compensation that the portfolio managers receive from Adams is the same as that for the registrant with the exceptions that (a) the portfolio managers' cash incentive compensation is based on a comparison with the performance of the S&P 500 Index and (b) for the equity incentive compensation granted to Ms. Prue, the Hypothetical Portfolio that is used for determining the number of shares of restricted stock that will vest is comprised of a 50/50 blend of (1) the S&P 500 Index and (2) the Lipper Large-Cap Core Mutual Funds Average.
	(4) Using a valuation date of December 31, 2013, Messrs. Stoeckle and Haynie and Ms. Prue each beneficially owned equity securities in the registrant valued between $100,001 and $500,000.
(b)	Not applicable.

Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

	Total Number of Shares (or Units Purchased)		Average Price Paid per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs
	-----------------------------------		-----------------------------------	-----------------------------------		-----------------------------------
January 2013	0		$0.00	0		1,282,726
February 2013	0		$0.00	0		1,282,726
March 2013	0		$0.00	0		1,282,726
April 2013	0		$0.00	0		1,282,726
May 2013	45,419		$26.58	45,419		1,237,307
June 2013	58,244		$25.87	58,244		1,179,063
July 2013	7,000		$25.82	7,000		1,172,063
August 2013	52,217		$26.57	52,217		1,119,846
September 2013	59,478		$27.16	59,478		1,060,368
October 2013	19,479		$27.50	19,479		1,040,889
November 2013	16,916		$28.22	16,916		1,023,973
December 2013	19,991		$26.53	19,991		1,304,473	(2c)
	-----------------------------------		-----------------------------------	-----------------------------------
Total	278,744	(1)	$26.70	278,744	(2a)(2b)

(1) There were no shares purchased other than through a publicly announced plan or program.

(2.a) The Plan was announced on December 13, 2012.

(2.b) The share amount approved in 2012 was 5% of outstanding shares, or 1,282,726 shares.

(2.c) The Plan was set to expire on December 31, 2013, but was extended by the Board on November 15, 2013, authorizing purchases of up to 5% of the outstanding shares, or 1,304,473 shares, through December 31, 2014.

(2.d) None.

(2.e) None.

Item 10. Submission of Matters to a Vote of Security Holders.

There were no material changes to the procedures by which shareholders may recommend nominees to the registrant's Board of Directors made or implemented after the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (as required by Item 22(b)(15) of Schedule 14A), or this Item.

Item 11. Controls and Procedures.

(a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing date of this report.

(b) There have been no significant changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 12. Exhibits.

(a)	(1)	Not applicable. See registrant's response to Item 2 above.
	(2)	Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(a) under the Investment Company Act of 1940, are attached.
	(3)	Written solicitation to purchases securities: not applicable.
(b) A certification by the registrant's principal executive officer and principal financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940, is attached.

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/ Mark E. Stoeckle
	Mark E. Stoeckle
	Chief Executive Officer
	(Principal Executive Officer)

Date:	February 26, 2014


	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/ Mark E. Stoeckle
	Mark E. Stoeckle
	Chief Executive Officer
	(Principal Executive Officer)

Date:	February 26, 2014


By:	/s/ Brian S. Hook
	Brian S. Hook
	Vice President, Chief Financial Officer and Treasurer
	(Principal Financial Officer)

Date:	February 26, 2014