Petroleum & Resources Commits to Annual 6% Minimum Payout

Date: 
09/13/2012

BALTIMORE, MARYLAND – September 13, 2012 – Petroleum & Resources Corporation (NYSE:PEO), a Baltimore-based energy and natural resources investment company with a 78-year history of paying dividends, announced today its commitment to an annual 6% minimum distribution rate:

  • The Fund will distribute to its shareholders annually an amount equal to at least 6% of the average month-end market price of the Corporation’s Common Stock on the NYSE.
  • This compares to the 2.04% dividend yield of the stocks in the S&P 500 Energy Index.
  • These distributions may be particularly attractive to investors seeking retirement income.

“At a time when income investors are finding few alternatives to persistently low interest rates, a commitment to an annual 6% minimum distribution rate offers investors dependable distributions in an otherwise volatile market,” said Douglas G. Ober, Chairman and CEO of Petroleum & Resources Corporation. “We will continue to manage our diversified portfolio of energy and natural resources stocks for solid long-term returns while committing to a minimum 6% distribution rate regardless of market conditions.”

The time frame that will be used for determining the average market price will be the month-end market prices over the trailing twelve months, calculated as of October 31. For comparison, the Corporation paid total distributions at an annual distribution rate of 5.5 % in 2010 and 7.1% in 2011. The announcement was approved by the Corporation’s Board of Directors and is effective immediately.

The Corporation will be using the same pay-out schedule that it has used for many years, which means paying small quarterly income distributions until the 4th quarter, when much of the distribution is paid. Accordingly, the Corporation will pay interim quarterly distributions of earned investment income on March 1, June 1, and September 1 (currently the Corporation is paying interim quarterly distributions of $0.10 each). For its annual year-end distribution, the Board of Directors will review the amount of income, capital gain, capital available, and the average month-end market price on the NYSE of the Corporation’s Common Stock for the trailing 12 months (as of October 31), and will pay out in December a year-end distribution that brings the amount of distributions paid out for the full year equal to at least 6% of the average market price.

Portions of the distributions may be treated as long-term capital gain and qualified dividend income for individuals, each subject to the maximum applicable federal income tax rate, which is currently 15% in taxable accounts for individuals. If, in a given year, the Corporation does not generate sufficient earnings from net investment income and net realized capital gains to meet the 6% minimum distribution amount, then the amount distributed in excess of the Corporation’s net investment income and net realized capital gains would be deemed a return of capital. Since this would be considered a return of a portion of a stockholder’s original investment, it generally would not be taxable under federal tax regulations and would be treated as a reduction in the shareholder’s cost basis. In certain circumstances, however, some or all of the return of capital distributed by the Corporation may be taxable. Shareholders should consult their tax advisers as to the tax treatment of such distributions, should they occur.

The Board of Directors will continue to monitor the Corporation’s distribution commitment, taking into consideration the Corporation’s net asset value and the market environment. The Corporation’s distribution commitment is subject to modification by the Board of Directors at any time. The distribution rate should not be considered the dividend yield or total return on an investment in the Corporation.

For more information about the distribution, including frequently asked questions, go to www.peteres.com/quick-FAQs-minimum-distribution

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For further information, please contact:

Lawrence L. Hooper, Jr., Vice President, General Counsel & Secretary
at (410) 752-5900 or (800) 638-2479

E-mail: contact@peteres.com
Website: www.peteres.com

Geraldine Leder
LederMark Communications
at (443) 841-6650

E-mail: leder@ledermark.com

Petroleum & Resources Commits to Annual 6% Minimum Payout

Stock and Distribution

Nav & Stock Price PER SHARE
Net Asset Value: $31.65
Closing Price:

$27.04

Discount: -14.6%

This is the closing price from the NYSE on 10/30/2014

annual DISTRIBUTION Rate
2013 7.2%

*The annual distribution rate is the total dividends and capital gain distributions divided by the average month-end market price of the Fund's Common Stock for the twelve months ended October 31.

As of September 13, 2012, the Fund committed to an annual distribution rate of at least 6%.