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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark one)

For the quarterly period ended June 30, 2002

OR

For the transition period from           to          

Commission file number 0-02517

TOREADOR RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (214) 559-3933

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X      No    

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

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TOREADOR RESOURCES CORPORATION

INDEX

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PART I. FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

TOREADOR RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

See accompanying notes to the consolidated financial statements.

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TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

See accompanying notes to the consolidated financial statements.

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TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 1 — BASIS OF PRESENTATION

You should read these consolidated financial statements along with the consolidated financial statements and notes in the 2001 Annual Report on Form 10-K of Toreador Resources Corporation (the “Company, we, us, our”) filed with the Securities and Exchange Commission. In our opinion, the information furnished herein reflects all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results of these interim periods. Operating results for the three-and six-month periods ended June 30, 2002, may not necessarily be indicative of the results for the year ending December 31, 2002.

NOTE 2 — COMPREHENSIVE INCOME

The following table presents the components of comprehensive income, net of related tax (amounts in thousands):

We now report foreign currency translation adjustments as a component of comprehensive income because of our operations in France, and Turkey since January 1, 2002.

NOTE 3 — RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

On July 20, 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (“Statement 142”). Under Statement 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or more frequently if there is a change in operating conditions that would make it prudent to do so) for impairment. Separable intangible assets that are not deemed to have an indefinite life will continue to be amortized over their useful lives (although Statement 142 specifies no maximum life). Prior to our merger with Madison Oil Company (“Madison”) on December 31, 2001, we had no goodwill; therefore, when we adopted Statement 142 on January 1, 2002, there was no impact on our financial position. The goodwill we recorded as the result of the Madison merger will be reviewed for impairment on a regular basis as required by Statement 142.

On August 15, 2001, the FASB issued Statement No. 143, Accounting for Asset Retirement Obligations (“Statement 143”). Statement 143 was initiated in 1994 to account for the costs of nuclear decommissioning. The FASB expanded the scope to include similar closure or removal-type costs in other industries that are incurred during the life of an asset. That standard requires entities to record the fair

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

value of a liability for an asset retirement obligation in the period in which the liability is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. Statement 143 is effective for fiscal years beginning after June 15, 2002, with earlier application encouraged. We will adopt this standard on January 1, 2003. We have not completed the process of determining the impact of adopting Statement 143.

On January 1, 2002, we adopted FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“Statement 144”). The new rules significantly change the criteria that would have to be met to classify an asset as held-for-sale. This distinction is important because assets held-for-sale are stated at the lower of their fair values or carrying amounts and depreciation is no longer recognized. The new rules also supersede the provisions of Accounting Principles Board Opinion No. 30 (“APB 30”) with regard to reporting the effects of a disposal of a segment of a business and require expected future operating losses from discontinued operations to be displayed in discontinued operations in the period(s) in which the losses are incurred (rather than as of the measurement date as presently required by APB 30). In addition, more dispositions will qualify for discontinued operations treatment in the income statement. Typically, when we identify properties for sale, we sell them immediately via internet auction. When we sell properties via internet auction, we set a minimum price (a “reserve” price) that must be met for the auction to close. If the reserve is not met, we have the ability to remove the property from sale. Because of these facts, the properties identified for sale do not meet the criteria to be classified as assets held-for-sale in accordance with Statement 144. Because we had no properties held for sale at December 31, 2001, adopting Statement 144 did not have a material impact on our financial position at January 1, 2002 or results of operations for the three-and six-month periods ended June 30, 2002.

In April 2002, the FASB issued Statement No. 145 (“Statement 145”), “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections,” related to accounting for debt extinguishments, leases, and intangible assets of motor carriers. The provisions of Statement 145 are effective for fiscal years beginning after May 15, 2002, with earlier adoption encouraged. We have not determined the impact of adopting Statement 145.

NOTE 4 — ACQUISITIONS

On May 31, 2002, we acquired Wilco Turkey Limited (“WTL”) from Wilco Properties, Inc. (“WPI”). WTL’s primary asset is an interest (ranging from 52.5% to 87.5%) in exploration licenses covering 2.2 million acres in the Thrace basin and in the central and southeast areas of Turkey. We also acquired from F-Co Holdings Kandamis (“F-CO”) additional interests (ranging from 7.5% to 12.5%) in the same exploration licenses. The purpose of the acquisition was to obtain, explore and possibly develop the acreage covered by the licenses. The acreage in the Thrace Basin is adjacent to or near the acreage we held prior to the acquisition of WTL. In exchange for all of the outstanding common stock of WTL, we have agreed to give WPI an overriding royalty interest in any successful wells we drill on the acreage covered by the exploration licenses we acquired. We have also agreed to give F-CO, in exchange for its interest in the acreage, an overriding royalty interest in any successful wells we drill on the acreage. As of the acquisition date, there were no outstanding liabilities associated with WTL. We did not convey value to WPI or F-CO on the acquisition date, or assume any liabilities; therefore, the fair value of the transaction was zero. We have allocated no value to the assets acquired from WTL and F-CO. WPI is controlled by William I. Lee, a director and shareholder, and F-CO is owned by Peter L. Falb, a director and shareholder.

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

NOTE 5 — GEOGRAPHIC OPERATING SEGMENT INFORMATION

We have operations in only one industry segment, the oil and gas exploration and production industry. We have structured the Company along geographic operating segments or regions. As a result, we have reportable operations in the United States, France and Turkey. Geographic operating segment income tax expenses have been determined based on statutory rates existing in the various tax jurisdictions where we have oil and natural gas producing activities.

The following tables provide the geographic operating segment data required by Statement of Financial Accounting Standards No. 131, Disclosure about Segments of an Enterprise and Related Information. Operations in France and Turkey did not begin until we completed our merger with Madison on December 31, 2001. Accordingly, we had operations in only the U.S. segment during the three-and six-month periods ended June 30, 2001. Subsequent to December 31, 2001, we combined the “United States” and “Headquarters and Other” segments to more accurately reflect the way we analyze our operations.

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)