TOREADOR RESOURCES CORP - FORM 10-Q

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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2009
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-02517

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


Delaware		75-0991164
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification Number)

13760 Noel Road, Suite 1100
Dallas, Texas 75240
(Address of principal executive office)

Registrant's telephone number, including area code: 33 1 47 03 34 24

Indicate by check mark whether the Registrant (i) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer ý		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of November 5, 2009, there were 21,456,153 shares of common stock, par value $.15625 per share, outstanding.

Table of Contents

TOREADOR RESOURCES CORPORATION

TABLE OF CONTENTS

		Page

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets—September 30, 2009 and December 31, 2008	1
	Consolidated Statements of Operations—for the three months ended September 30, 2009 and 2008	2
	Consolidated Statements of Operations—for the nine months ended September 30, 2009 and 2008	3
	Consolidated Statements of Cash Flows—for the nine months ended September 30, 2009 and 2008	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 6.	Exhibits	49
	SIGNATURES	50

Table of Contents

PART I. FINANCIAL INFORMATION

TOREADOR RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS

			September 30, 2009			December 31, 2008

			(Unaudited)
			(In thousands, except share and per share data)
ASSETS
Current assets:
	Cash and cash equivalents		$	10,626		$	14,860
	Accounts receivable			2,734			1,057
	Oil and natural gas properties, net, held for sale			16,507			91,958
	Other assets held for sale			15,371			14,963
	Other			3,705			3,713

		Total current assets		48,943			126,551

Oil and natural gas properties, net, using successful efforts method of accounting				73,157			72,753
Investments				200			200
Goodwill				4,038			3,838
Other assets				3,007			3,814

			$	129,345		$	207,156

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable and accrued liabilities		$	9,149		$	7,700
	Liabilities held for sale			2,764			11,366
	Deferred lease payable			106			93
	Current portion of long-term debt			—			30,000
	Income taxes payable			—			4,223

		Total current liabilities		12,019			53,382

Long-term accrued liabilities				197			501
Deferred lease payable				471			550
Asset retirement obligations				6,758			6,037
Deferred income tax liabilities				14,812			13,851
Convertible senior notes				63,592			80,275

		Total liabilities		97,849			154,596

Commitments and contingencies
Stockholders' equity:
	Common stock, $0.15625 par value, 30,000,000 shares authorized; 22,206,680 and 20,984,360 shares issued			3,470			3,279
	Additional paid-in capital			160,782			166,484
	Accumulated deficit			(162,428	)		(151,169	)
	Accumulated other comprehensive income			32,206			36,500
	Treasury stock at cost, 721,027 shares			(2,534	)		(2,534	)

		Total stockholders' equity		31,496			52,560

			$	129,345		$	207,156

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

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TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

				Three Months Ended September 30,

				2009			2008
				(Unaudited)
				(In thousands, except per share data)
Oil sales				$	5,204		$	9,641
Operating costs and expenses:
		Lease operating			1,468			2,327
		Exploration expense			22			170
		Depreciation, depletion and amortization			1,393			1,196
		General and administrative			4,136			2,207
		Gain on oil and gas derivative contracts			(7	)		(2,405	)

			Total operating costs and expenses		7,012			3,495

Operating income (loss)					(1,808	)		6,146
Other income (expense):
		Foreign currency exchange gain (loss)			1			(17	)
		Gain on early extinguishment of debt			—			368
		Interest and other income			250			196
		Interest expense, net of interest capitalized			(616	)		(1,109	)

			Total other income (expense)		(365	)		(562	)

Income (loss) before taxes					(2,173	)		5,584
Income tax (benefit) provision					(232	)		1,787

Income (loss) from continuing operations, net of income taxes					(1,941	)		3,797
Loss from discontinued operations, net of income taxes					(10,518	)		(3,727	)

Income (loss) available to common shares				$	(12,459	)	$	70

Basic income (loss) available to common shares per share:
	From continuing operations, net of income taxes			$	(0.09	)	$	0.19
	From discontinued operations, net of income taxes				(0.50	)		(0.19	)

				$	(0.59	)	$	0.00

Diluted income (loss) available to common shares per share:
	From continuing operations, net of income taxes			$	(0.09	)	$	0.19
	From discontinued operations, net of income taxes				(0.50	)		(0.19	)

				$	(0.59	)	$	0.00

Weighted average shares outstanding:
	Basic				20,869			19,929

	Diluted				20,869			19,930

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

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TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

			Nine Months Ended September 30,

			2009			2008
			(Unaudited)
			(In thousands, except per share data)
Oil sales			$	13,096		$	29,478
Operating costs and expenses:
	Lease operating			5,029			6,855
	Exploration expense			130			918
	Depreciation, depletion and amortization			4,536			3,490
	General and administrative			14,663			10,574
	(Gain) loss on oil and gas derivative contracts			(7	)		1,806
	Gain on sale of properties and other assets			(121	)		—
	Impairment of oil and gas properties			—			2,282

		Total operating costs and expenses		24,230			25,925

Operating loss				(11,134	)		3,553
Other income (expense):
	Foreign currency exchange gain			131			977
	Gain on the early extinguishment of debt			3,370			368
	Interest and other income			726			598
	Interest expense, net of interest capitalized			(2,559	)		(3,122	)

		Total other (expense) income		1,668			(1,179	)

Income (loss) before taxes				(9,466	)		2,374
Income tax (benefit) provision				(1,002	)		6,270

Loss from continuing operations, net of income taxes				(8,464	)		(3,896	)
Loss from discontinued operations, net of income taxes				(11,988	)		(66,228	)

Loss available to common shares			$	(20,452	)	$	(70,124	)

Basic loss available to common shares per share:
From continuing operations, net of income taxes			$	(0.41	)	$	(0.20	)
From discontinued operations, net of income taxes				(0.59	)		(3.35	)

			$	(1.00	)	$	(3.55	)

Diluted loss available to common shares per share:
From continuing operations, net of income taxes			$	(0.41	)	$	(0.20	)
From discontinued operations, net of income taxes				(0.59	)		(3.35	)

			$	(1.00	)	$	(3.55	)

Weighted average shares outstanding:
	Basic			20,428			19,776

	Diluted			20,428			19,776

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

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TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Nine Months Ended September 30,

			2009			2008
			(Unaudited)
			(In thousands)
Cash flows from operating activities:
	Net loss		$	(20,452	)	$	(70,124	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Depreciation, depletion and amortization		4,693			29,953
		Stock based compensation		3,909			1,859
		Deferred income taxes benefit		679			(1,546	)
		Dry hole costs		1,318			—
		Impairment of oil and natural gas properties		10,725			55,461
		Impairment of investments		—			300
		Gain on sale of properties and other assets		(121	)		—
		Gain on sale of discontinued operations		(1,675	)		—
		Gain on early extinguishment of debt—convertible notes		(3,370	)		(368	)
		Loss on early extinguishment of debt—revolving credit facility		4,881			—
	Increase in accounts receivable			(1,677	)		(238	)
	Decrease in other current assets			8			1,020
	Decrease in other assets			155			235
	Increase in other assets held for sale			(1,299	)		(758	)
	Increase (decrease) in accounts payable and accrued liabilities			1,080			(131	)
	Increase (decrease) in income taxes payable			(4,223	)		5,148
	Increase (decrease) in liabilities held for sale			(5,797	)		1,700

		Net cash provided by (used in) operating activities		(11,166	)		22,511

Cash flows from investing activities:
	Proceeds from sale of property and equipment			121			—
	Expenditures for property and equipment			(4,521	)		(9,729	)
	Proceeds from sale of oil and gas properties			60,418			—

		Net cash provided by (used in) investing activities		56,018			(9,729	)

Cash flows from financing activities:
	Repayment of convertible notes			(12,661	)		(4,909	)
	Repayment of revolving credit facility			(36,372	)		—
	Proceeds from issuance of common stock			(49	)		745

		Net cash used in financing activities		(49,082	)		(4,164	)

Net (decrease) increase in cash and cash equivalents				(4,230	)		8,618
Effects of foreign currency translation on cash and cash equivalents				(4	)		(2,457	)
Cash and cash equivalents, beginning of period				14,860			8,403

Cash and cash equivalents, end of period			$	10,626		$	14,564

Supplemental disclosures:
		Cash paid during the period for interest, net of interest capitalized	$	1,669		$	4,419
		Cash paid during the period for income taxes	$	4,032		$	2,488

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

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION

The consolidated financial statements of Toreador Resources Corporation and subsidiaries ("Toreador," "we," "us," "our," or the "Company") included herein have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). They reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the interim periods, on a basis consistent with the annual audited financial statements. All such adjustments are of a normal recurring nature, unless noted herein. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained herein are adequate to make the information presented not misleading. These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2008, which was initially filed with the SEC on March 16, 2009 and was amended on April 16, 2009. Certain prior-year amounts have been reclassified and adjusted to conform to the 2009 presentation and to present the operations of Turkey, Hungary and Romania as discontinued operations. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Unless otherwise noted, amounts reported in tables are in thousands, except per unit data.

On March 3, 2009, we completed the sale of a 26.75% interest in the South Akcakoca Sub-Basin (SASB) project associated licenses located in the Black Sea offshore Turkey to Petrol Ofisi for $55 million. In accordance with the revised agreement announced on February 3, 2009, $50 million of the proceeds was paid by Petrol Ofisi on March 3, 2009, and the remaining $5 million was paid by Petrol Ofisi on September 1, 2009.

In accordance with the covenants of our revolving credit facility with the International Finance Corporation, a portion of the proceeds of the sale of our 26.75% interest in the SASB to Petrol Ofisi was used to fully repay the $36.4 million balance outstanding under the credit facility, which was comprised of $30 million principal, $5.9 million of additional compensation due under the credit facility as a result of our repayment (such additional compensation calculated under the terms of the credit facility as a percentage of the Company's earnings before interest, tax, depreciation, amortization and exploration expense) and $500,000 for accrued interest and fees.

On September 30, 2009, the Company entered into a Quota Purchase Agreement (the "Quota Purchase Agreement") with RAG (Rohöl-Aufsuchungs Aktiengesellschaft), a corporation organized under the laws of Austria ("RAG"), pursuant to which the Company agreed to sell 100% of its equity interests in Toreador Hungary Limited ("Toreador Hungary") to RAG for total consideration consisting of (1) a cash payment of US$5.4 million (€3.7 million) paid at closing, (2) US$435,000 (€300,000), which was held back and is subject to a post-closing adjustment, and (3) a contingent payment of US$2.9 million (€2 million) to be paid upon post-transaction completion of agreements relating to certain assets of Toreador Hungary. The sale of Toreador Hungary was completed on September 30, 2009.

On September 30, 2009, the Company entered into a Share Purchase Agreement (the "Share Purchase Agreement") with Tiway Oil BV, a company organized under the laws of the Netherlands

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION (Continued)

("Tiway"), and Tiway Oil AS, a company organized under the laws of Norway, pursuant to which the Company agreed to sell 100% of the outstanding shares of Toreador Turkey Ltd. ("Toreador Turkey") to Tiway for total consideration consisting of: (1) a cash payment of $10.6 million to be paid at closing (subject to a post-closing adjustment), (2) exploration success payments dependent upon certain future commercial discoveries as provided in the Share Purchase Agreement, up to a maximum aggregate consideration of $40 million, and (3) future quarterly 10% pre-tax net profit interest payments if a field goes into production that was discovered by an exploration well drilled within four years of closing on certain of the licenses then still held by Tiway. The sale of Toreador Turkey closed on October 7, 2009.

New Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (the "FASB") issued FASB Accounting Standards Codification (ASC) 805, "Business Combinations", formerly Statement No. 141R, "Business Combinations" ("SFAS No. 141R"). Under ASC 805, a company is required to recognize the assets acquired, liabilities assumed, contractual contingencies, and any contingent consideration measured at their fair value at the acquisition date. It further requires that research and development assets acquired in a business combination that have no alternative future use are to be measured at their acquisition-date fair value and then immediately charged to expense, and that acquisition-related costs are to be recognized separately from the acquisition and expensed as incurred. Among other changes, this statement also requires that "negative goodwill" be recognized in earnings as a gain attributable to the acquisition, and any deferred tax benefits resultant in a business combination be recognized in income from continuing operations in the period of the combination. ASC 805 is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after December 15, 2008. On January 1, 2009, the Company adopted ASC 805 and applies its provisions prospectively to business combinations that occur after adoption. The adoption did not have any immediate effect on the financial statements and related disclosures.

In December 2007, the FASB issued FASB Accounting Standards Codification (ASC) 810, "Consolidations", formerly Statement No. 160, "Non-controlling Interests in Consolidated Financial Statements"—an amendment of ARB No. 51 ("SFAS No. 160"). The Standard establishs accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Among other requirements, this statement requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. The Standard is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2008. On January 1, 2009, the Company adopted ASC 810 and there was no effect on the financial statements and related disclosures.

In February 2008, the FASB issued FASB Accounting Standards Codification (ASC) 820, "Fair Value Measurements and Disclosures", formerly FSP No. 157-2 ("FASB No. 157-2") to defer the effective date to fiscal years beginning after November 15, 2008, and the interim periods within such fiscal years, for all related nonfinancial assets and liabilities, including nonfinancial assets and liabilities

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION (Continued)

measured at fair value in a business combination; impaired property, plant and equipment; goodwill; and initial recognition of asset retirement obligations. We adopted the Standard effective January 1, 2009 and the adoption did not have a significant effect on the financial positions and results of operations. Refer to Note 14 for related disclosures.

In March 2008, the FASB issued FASB Accounting Standards Codification (ASC) 815, "Derivitives and Hedging", formerly Statement No. 161, "Disclosures about Derivative Instruments and Hedging Activities"—an Amendment of FASB Statement No. 133 ("SFAS No. 161"). This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for and (iii) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. The Standard is effective for annual periods beginning after November 15, 2008. On January 1, 2009, the Company adopted the Standard and there was no effect on the financial statements and related disclosures.

In May 2008, the FASB issued FASB Accounting Standards Codification (ASC) 470, "Debt", formerly FASB Staff Position ("FSP") No. APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement)" ("FSP APB No. 14-1"). The Standard specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest costs is recognized in subsequent periods. The Standard is effective for financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years and should be applied retrospectively for all periods presented. On January 1, 2009, the Company adopted the Standard and there was no effect on our financial statements and related disclosures.

In November 2008, the FASB issued FASB Accounting Standards Codification (ASC) 323, "Investments—Equity Method and Joint Ventures", formerly ratified EITF 08-6, "Equity Method Investment Accounting Considerations" ("EITF 08-6") which clarifies how to account for certain transactions involving equity method investments. The initial measurement, decreases in value and changes in the level of ownership of the equity method investment are addressed. The Standard is effective on a prospective basis for our fiscal year beginning January 1, 2009 and interim periods within the years. Early application by an entity that has previously adopted an alternative accounting policy is not permitted. On January 1, 2009, the Company adopted the Standard and there was no effect on our financial statements and related disclosures.

On December 31, 2008 the SEC issued the final rule, "Modernization of Oil and Gas Reporting" (the "Final Reporting Rule"). The Final Reporting Rule adopts revisions to the SEC's oil and gas reporting disclosure requirements and is effective for annual reports on Forms 10-K for years ending on or after December 31, 2009. The revisions are intended to provide investors with a more meaningful and comprehensive understanding of oil and gas reserves to help investors evaluate their investments in oil and gas companies. The amendments are also designed to modernize the oil and gas disclosure

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION (Continued)

requirements to align them with current practices and changes in technology. Revised requirements in the Final Reporting Rule include, but are not limited to:

•: Oil and gas reserves must be reported using the un-weighted arithmetic average of the first day of the month price for each month within a 12 month period, rather than year-end prices;
•: Companies will be allowed to report, on an optional basis, probable and possible reserves;
•: Non-traditional reserves, such as oil and gas extracted from coal and shales, will be included in the definition of "oil and gas producing activities;"
•: Companies will be permitted to use new technologies to determine proved reserves, as long as those technologies have been demonstrated empirically to lead to reliable conclusions with respect to reserve volumes;
•: Companies will be required to disclose, in narrative form, additional details on their proved undeveloped reserves ("PUDs"), including the total quantity of PUDs at year end, and any material changes to PUDs that occurred during the year, investments and progress made to convert PUDs to developed oil and gas reserves and an explanation of the reasons why material concentrations of PUDs in individual fields or countries have remained undeveloped for five years or more after disclosure as PUDs; and
•: Companies will be required to report the qualifications and measures taken to assure the independence and objectivity of any business entity or employee primarily responsible for preparing or auditing reserves estimate.

We will comply with the disclosure requirements in our annual report on Form 10-K for the year ended December 31, 2009.

On April 9, 2009, the FASB issued FASB Accounting Standards Codification (ASC) 825, "Financial Instruments", formerly FASB Staff Position No. FAS 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments" (FSP 107-1). The Standard requires disclosures about financial instruments, including fair value, carrying amount, and method and significant assumptions used to estimate the fair value. The Company adopted this standard as of June 30, 2009. Our adoption of this standard did not affect our financial position or results of operations.

In May 2009, the FASB issued FASB Accounting Standards Codification (ASC) 855, "Subsequent Events", formerly issued as Statement No. 165, "Subsequent Events" (SFAS No. 165), to incorporate the accounting and disclosure requirements for subsequent events into U.S. generally accepted accounting principles. The Standard introduces new terminology, defines a date through which management must evaluate subsequent events, and lists the circumstances under which an entity must recognize and disclose events or transactions occurring after the balance-sheet date. The Company adopted the Standard as of June 30, 2009, which was the required effective date.

In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140" (SFAS 166). SFAS 166 removes the concept of a qualifying special-purpose entity from SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," establishes a new "participating interest" definition that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarifies and amends the

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION (Continued)

de-recognition criteria for a transfer to be accounted for as a sale, and changes the amount that can be recognized as a gain or loss on a transfer accounted for as a sale when beneficial interests are received by the transferor. Enhanced disclosures are also required to provide information about transfers of financial assets and a transferor's continuing involvement with transferred financial assets. This statement must be applied as of the beginning of an entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. We are currently evaluating the impact of this standard on our consolidated financial statements.

In June 2009, the FASB issued FASB Accounting Standards Codification (ASC) 810, "Consolidations", formerly issued as SFAS No. 167, "Amendments to FASB Interpretation No. 46(R)" (SFAS 167). SFAS 167 amends FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities" (FIN 46(R)) to require an enterprise to qualitatively assess the determination of the primary beneficiary of a variable interest entity (VIE) based on whether the entity (1) has the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (2) has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Also, SFAS 167 requires an ongoing reconsideration of the primary beneficiary, and amends the events that trigger a reassessment of whether an entity is a VIE. Enhanced disclosures are also required to provide information about an enterprise's involvement in a VIE. This statement shall be effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. We are currently evaluating the impact of this standard on our consolidated financial statements.

In June 2009, the FASB issued Accounting Standards Update 2009-01, Amendments based on SFAS No. 168—The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles to codify in ASC 105, Generally Accepted Accounting Principles, FASB Statement 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles, which was issued to establish the Codification as the sole source of authoritative U.S. GAAP recognized by the FASB, excluding SEC guidance, to be applied by nongovernmental entities. The guidance in ASC 105 is effective for financial statements issued for interim and annual periods ending after September 15, 2009.
Applying the guidance in ASC 105 did not impact the Company's financial condition and results of operations. The Company has revised its references to pre-Codification GAAP in its financial statements for the three and nine month periods ended September 30, 2009.

In August 2009, the FASB issued ASU 2009-05, "Fair Value Measurements and Disclosures (Topic 820)—Measuring Liabilities at Fair Value" to provide guidance when estimating the fair value of a liability. When a quoted price in an active market for the identical liability is not available, fair value should be measured using:

•: the quoted price of an identical liability when traded as an asset,
•: quoted prices for similar liabilities or similar liabilities when traded as assets, or

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1—BASIS OF PRESENTATION (Continued)

•: another valuation technique consistent with the principles of Topic 820 such as an income approach or a market approach.

If a restriction exists that prevents the transfer of the liability, a separate adjustment related to the restriction is not required when estimating fair value. The Standard is effective for the first reporting period (including interim periods) beginning after issuance. We are currently evaluating this new statement, but do not expect it to have an impact on our financial statements or results of operations.

NOTE 2—CONCENTRATION OF CREDIT RISK AND ACCOUNTS RECEIVABLE

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash, restricted cash and accounts receivable. We place our cash with high credit quality financial institutions. We sell oil and natural gas to various customers.

We periodically review the collectability of accounts receivable and record a valuation allowance for those accounts which are, in our judgment, unlikely to be collected. We have not had any significant credit losses in the past and we believe our accounts receivable are fully collectable.

Accounts receivable consisted of the following:

	September 30, 2009		December 31, 2008

Accrued oil receivables	$	2,455	$	751
Trade receivables		—		—
Recoverable VAT		200		—
Other accounts receivable		79		306

	$	2,734	$	1,057

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 3—EARNINGS (LOSS) PER COMMON SHARE

The following table reconciles the numerators and denominators of the basic and diluted earnings (loss) per common share computation:

				Three Months Ended September 30,

				2009			2008
Basic earnings (loss) per share:
	Numerator:
		Income (loss) from continuing operations, net of income tax		$	(1,941	)	$	3,797
		Loss from discontinued operations, net of income tax			(10,518	)		(3,727	)

		Income (loss) available to common shareholders		$	(12,459	)	$	70

	Denominator:
		Weighted average common shares outstanding			20,869			19,929

		Basic earnings (loss) available to common shareholders per share from:
			Continuing operations	$	(0.09	)	$	(0.19	)
			Discontinued operations		(0.50	)		0.19

				$	(0.59	)	$	—

Diluted earnings (loss) per share:
	Numerator:
		Income (loss) from continuing operations, net of income tax		$	(1,941	)	$	3,797
		Loss from discontinued operations, net of income tax			(10,518	)		(3,727	)

		Income (loss) available to common shareholders		$	(12,459	)	$	70

	Denominator:
		Weighted average common shares outstanding			20,869			19,929
		Common stock options and warrants			—	(1)		1
		Conversion of 5.0% notes payable			—	(2)		—	(2)

		Diluted shares outstanding			20,869			19,930

		Diluted earnings (loss) available to common shareholders per share from:
			Continuing operations	$	(0.09	)	$	(0.19	)
			Discontinued operations		(0.50	)		0.19

				$	(0.59	)	$	—

(1): Conversion of these securities would be antidilutive; therefore, there are no dilutive shares.
(2): Conversion of the 5% Convertible Senior Notes would be anti-dilutive therefore, there are no dilutive shares.

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 3—EARNINGS (LOSS) PER COMMON SHARE (Continued)

				Nine Months Ended September 30,

				2009			2008
Basic loss per share:
	Numerator:
		Loss from continuing operations, net of income tax		$	(8,464	)	$	(3,896	)
		Loss from discontinued operations, net of income tax			(11,988	)		(66,228	)

		Loss available to common shareholders		$	(20,452	)	$	(70,124	)

	Denominator:
		Weighted average common shares outstanding			20,428			19,776

		Basic loss available to common shareholders per share from:
			Continuing operations	$	(0.41	)	$	(0.20	)
			Discontinued operations		(0.59	)		(3.35	)

				$	(1.00	)	$	(3.55	)

Diluted loss per share:
	Numerator:
		Loss from continuing operations, net of income tax		$	(8,464	)	$	(3,896	)
		Loss from discontinued operations, net of income tax			(11,988	)		(66,228	)

		Loss available to common shareholders		$	(20,452	)	$	(70,124	)

	Denominator:
		Weighted average common shares outstanding			20,428			19,776
		Conversion of 5.0% notes payable			—	(1)		—	(1)

		Diluted shares outstanding			20,428			19,776

		Diluted loss available to common shareholders per share from:
			Continuing operations	$	(0.41	)	$	(0.20	)
			Discontinued operations		(0.59	)		(3.35	)

				$	(1.00	)	$	(3.55	)

(1): Conversion of the 5% Convertible Senior Notes would be antidilutive therefore, there are no dilutive shares.

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 4—COMPREHENSIVE LOSS

The following table presents the components of comprehensive loss, net of related tax:

	Three Months Ended September 30,						Nine Months Ended September 30,

	2009			2008			2009			2008
Net Income (loss)	$	(12,459	)	$	70		$	(20,452	)	$	(70,124	)
Foreign currency translation adjustment		(2,034	)		(7,102	)		(4,289	)		(2,259	)

Comprehensive loss	$	(14,493	)	$	(7,032	)	$	(24,741	)	$	(72,383	)

NOTE 5—LONG-TERM DEBT

Long-term debt consisted of the following:

	September 30, 2009		December 31, 2008

Secured revolving facility with the International Finance Corporation	$	—	$	30,000
Convertible senior notes		63,592		80,275

		63,592		110,275
Less: current portion		—		30,000

	$	63,592	$	80,275

CONVERTIBLE SENIOR NOTES DUE OCTOBER 1, 2025

On September 27, 2005, we issued $75 million of Convertible Senior Notes due October 1, 2025 ("Convertible Senior Notes") to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"). The Company also granted the initial purchasers the option to purchase an additional $11.25 million aggregate principal amount of Convertible Senior Notes to cover over-allotments. The over-allotment option was exercised on September 30, 2005. The total principal amount of Convertible Senior Notes issued was $86.25 million and total net proceeds were approximately $82.2 million. We incurred approximately $4.1 million of costs associated with the issuance of the Convertible Senior Notes; these costs have been recorded in other assets on the balance sheet and are being amortized to interest expense using the straight-line interest rate method over the term of the Convertible Senior Notes.

The net proceeds were used for general corporate purposes, including funding a portion of the Company's 2005 and 2006 exploration and development activities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 5—LONG-TERM DEBT (Continued)

specified period. On or after October 1, 2010, we may redeem the Convertible Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Convertible Senior Notes to be redeemed, plus any accrued and unpaid interest, irrespective of the price of its common stock. Holders may convert their Convertible Senior Notes at any time prior to the close of business on the business day immediately preceding their stated maturity, and holders may, upon the occurrence of certain fundamental changes, and on October 1, 2010, October 1, 2015, and October 1, 2020, require us to repurchase all or a portion of their Convertible Senior Notes for cash in an amount equal to 100% of the principal amount of such Convertible Senior Notes, plus any accrued and unpaid interest.

An inability to refinance or otherwise fund the Company's payment obligations with respect to the Convertible Senior Notes would result in an event of default under the Convertible Senior Notes, which, if not cured or waived, would permit the holders of the Convertible Senior Notes to declare the outstanding principal, and any accrued and unpaid interest, if any, and any premium, on all the Convertible Senior Notes to be immediately due and payable. If such an acceleration occurs, and the Company is not at that time able to repay, as a result of the actions above or otherwise, or borrow sufficient funds to refinance, the Convertible Senior Notes, the Company may not be able to continue its operations and there would be doubt as to whether the Company could continue as a going concern.

In 2008, we repurchased $6 million in principal amount of the Convertible Senior Notes on the open market and through privately negotiated transactions for $5.3 million plus accrued interest of $109,347. Additionally, we expensed $241,965 of prepaid loan fees attributable to the repurchased Convertible Senior Notes. This resulted in a $458,535 gain on the early extinguishment of debt.

In April 2009, we repurchased $16.7 million principal amount of the Convertible Senior Notes on the open market and through privately negotiated transactions for $12.7 million plus accrued interest and prepaid loan fees of $650,000. This repurchase resulted in a gain of $3.4 million on the early extinguishment of debt which was recorded in the second quarter of 2009. In October 2009, we repurchased $9 million principal amount of the Convertible Senior Notes on the open market and through privately negotiated transactions for $8.7 million plus accrued interest and prepaid loan fees of $340,000. This repurchase resulted in a loss of $26,000 on the early extinguishment of debt which will be recorded in the fourth quarter of 2009.

We intend to continue to buy back a portion of the currently outstanding Convertible Senior Notes in the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 5—LONG-TERM DEBT (Continued)

SECURED REVOLVING FACILITY WITH THE INTERNATIONAL FINANCE CORPORATION

On December 28, 2006, we entered into a loan and guarantee agreement with International Finance Corporation. The loan and guarantee agreement provided for a $25 million facility which was a secured revolving facility with a maximum facility amount of $25 million which maximum facility amount would have increased to $40 million if the projected total borrowing base amount exceeds $50 million. The $25 million facility funded on March 2, 2007. The loan and guarantee agreement also provided for an unsecured $10 million facility which funded on December 28, 2006. Both the $25 million facility and the $10 million facility were to fund our operations in Turkey and Romania.

On March 3, 2009, we repaid and retired the facilities with the International Finance Corporation. The total amount of the payment was $36.4 million, which was comprised of $30 million principal, $5.9 million additional compensation due under the credit facility as a result of our repayment (such additional compensation calculated under the terms of the credit facility as a percentage of the Company's earnings before interest, tax, depreciation, amortization and exploration expense) and $500,000 for accrued interest and fees. As a result of the early extinguishment, we recorded a loss of $4.9 million for the period ended September 30, 2009 which was recorded in discontinued operations.

NOTE 6—ASSET RETIREMENT OBLIGATIONS

We account for our asset retirement obligations in accordance with the provisions of FASB Accounting Standards Codification (ASC) 410, "Asset Retirement and Enviromental Obligations", which requires us to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes the 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, we either settle the obligation for its recorded amount or incur a gain or loss upon settlement.

The following table summarizes the changes in our asset retirement liability (excluding the asset retirement obligations held for sale) during the nine months ended September 30, 2009 and the year ended December 31, 2008:

	Nine Months Ended Sept. 30, 2009		Year Ended December 31, 2008

Asset retirement obligation at beginning of period	$	6,037	$	5,106
Asset retirement accretion expense		381		357
Foreign currency exchange gain		340		(279	)
Change in estimates		—		1,213
Property dispositions		—		(360	)

Asset retirement obligation at end of period	$	6,758	$	6,037

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 7—GEOGRAPHIC OPERATING SEGMENT INFORMATION

We have operations in only one industry segment, the oil and natural gas exploration and production industry. We are structured along geographic operating segments or regions. During the current period we reclassified our operations in Turkey, Hungary and Romania to discontinued operations (See Note 12). As a result, we have continuing operations in the United States and France.

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".

	Three Months Ended September 30, 2009

	United States			France		Total
Revenues	$	63		$	5,141	$	5,204
Costs and expenses		3,307			3,705		7,012

Operating income (loss)	$	(3,244	)	$	1,436	$	(1,808	)

	Three Months Ended September 30, 2008

	United States			France		Total
Revenues	$	15		$	9,626	$	9,641
Costs and expenses		(131	)		3,626		3,495

Operating income	$	146		$	6,000	$	6,146

	Nine Months Ended September 30, 2009

	United States			France		Total
Revenues	$	217		$	12,879	$	13,096
Costs and expenses		12,729			11,501		24,230

Operating income (loss)	$	(12,512	)	$	1,378	$	(11,134	)

	Nine Months Ended September 30, 2008

	United States			France		Total
Revenues	$	40		$	29,438	$	29,478
Costs and expenses		14,548			11,377		25,925

Operating income (loss)	$	(14,508	)	$	18,061	$	3,553

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 7—GEOGRAPHIC OPERATING SEGMENT INFORMATION (Continued)

	Total Assets(1)

	United States		France		Hungary		Turkey			Romania			Total
	Continuing Operations				Discontinued Operations
September 30, 2009	$	194,256	$	97,404	$	—	$	(109,049	)	$	—		$	182,611

December 31, 2008	$	276,434	$	93,691	$	1,974	$	(69,537	)	$	(33,046	)	$	269,516

(1): Each segment's total assets reflect the effect of intersegment eliminations of $53,266 for the periods ending September 30, 2009 and $62,360 December 31, 2008

NOTE 8—INCOME TAXES

At September 30, 2009, we recorded a zero income tax payable as all income taxes have been paid. For the nine months ended September 30, 2009 and 2008 we paid income taxes of approximately $4 million and $2.5 million, respectively, related to French taxable income. As of September 30, 2009, our French operations recorded a $332,000 tax benefit, and the U.S. operations recorded a tax benefit of $670,000, which resulted in a consolidated tax benefit of $1 million. Our effective income tax rate differs from the statutory rates applicable to jurisdictions in which we operate due primarily to the establishment of a U.S. valuation allowance of $4 million, which was required because we could not be assured of the future utilization of net operating losses of $11.8 million.

The Company records income taxes in accordance with the provisions of FASB Accounting Standards Codification (ASC) 740, "Income Taxes". We have recognized an increase in the liability for unrecognized tax expense of approximately $45,000, which was accounted for as a decrease to the January 1, 2007 balance of retained earnings. As of the date of adoption and after the impact of recognizing the increase in liability noted above, our unrecognized tax benefits totaled approximately $357,000, the disallowance of which would not materially affect the effective income tax rate. There are no tax positions for which a material change in the unrecognized tax benefit is reasonably possible in the next 12 months.

The Company recognizes potential accrued interest and penalties related to unrecognized tax benefits within its global operations in income tax expense. Additionally, the Company recognized approximately $28,000 for the accrual of interest and penalties at January 1, 2007, which was included as a component of the $357,000 unrecognized tax benefit noted above. During the nine months ended September 30, 2009, the Company recognized $0 in potential interest and penalties associated with uncertain tax positions. At September 30, 2009, our income tax liability was reduced by $314,000 as a result of the close of the 2005 tax year. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

In addition to U.S. federal tax returns, we file several state and foreign tax returns, many of which remain open for examination for five years.

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 9—CAPITAL

For the nine months ended September 30, 2009, the Company issued 1,314,204 shares of stock to employees and directors, of which 939,597 shares were immediately vested in accordance with the terms of the grants and 31,000 stock options were exercised under the terms of the option agreements. Forfeitures for the nine months ended September 30, 2009 were 122,884 shares of restricted stock and 179,500 stock options.

NOTE 10—CAPITALIZED INTEREST

We capitalize interest on major projects that require an extended period of time to complete. Interest capitalized for the three months ended September 30, 2009 and 2008 was $118,000 and $230,000 respectively. Interest capitalized for the nine months ended September 30, 2009 and 2008 was $355,000 and $780,000, respectively.

NOTE 11—COMMITMENTS AND CONTINGENCIES

In 2005, two separate incidents occurred offshore Turkey in the Black Sea, which resulted in the sinking of two caissons (the "Fallen Structures") and the loss of three natural gas wells. The Company has not been requested to or ordered by any governmental or regulatory body to remove the caissons. Therefore, the Company believes that the likelihood of receiving such a request or order is remote and no liability has been recorded. In connection with the Company's sale of its 26.75% interest in the SASB to Petrol Ofisi in March 2009 and its sale of Toreador Turkey to Tiway in October 2009, the Company has agreed to indemnify Petrol Ofisi and Tiway, respectively, against and in respect of any claims, liabilities and losses arising from the Fallen Structures. The Company has also indemnified a third party vendor for any claims made related to these incidents.

On October 16, 2003, the Company entered into an agreement (the "Netherby Agreement") with Netherby Investments Limited ("Netherby") pursuant to which Netherby agreed to post the collateral required by the Turkish government for the Company to retain its rights to the eight off-shore exploration SASB licenses in exchange for a 1.5% gross overriding royalty interest (the "Overriding Royalty") on the net value to Toreador of all future production on SASB, if any. On April 30, 2009, the Company received a letter from attorneys representing Netherby claiming that Toreador's sale of its 26.75% interest in the SASB to Petrol Ofisi in March 2009 and Toreador's proposed sale of its remaining 10% interest in the SASB constitute a breach of the Netherby Agreement and demanding a $10.4 million payment. Toreador does not believe that Netherby is entitled to the $10.4 million claimed, though no formal legal evaluation of the likely outcome of this claim can be made at this time. The Company has agreed to indemnify Petrol Ofisi and Tiway against and in respect of any and all claims, liabilities, and losses arising from the Overriding Royalty. Additionally, the Company believes the claim is baseless, without merit and will be vigorously defended against.

On June 17, 2009, The Scowcroft Group, Inc. ("Scowcroft") filed a complaint in the United States District Court for the District of Columbia against the Company. The complaint alleges that Toreador breached a contract (the "Scowcroft Contract") between Scowcroft and Toreador relating to the sale of its interests in the SASB and that Scowcroft is entitled to a success fee thereunder as a result of the sale of Toreador's interests in the SASB to Petrol Ofisi in March 2009. The complaint also alleges unjust enrichment/quantum meruit and fraud. Scowcroft is seeking damages in the amount of $2 million plus interest, costs and expenses. On July 24, 2009, the Company filed a motion to dismiss

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 11—COMMITMENTS AND CONTINGENCIES (Continued)

the complaint. The district court denied the Company's motion to dismiss the action on October 26, 2009. The Company's answer is due by November 20, 2009. The Company believes the lawsuit lacks merit and intends to continue vigorously defending itself.

From time to time, we are named as a defendant in other legal proceedings arising in the normal course of business. In our opinion, the final judgment or settlement, if any, which may be awarded with any suit or claim would not have a material adverse effect on our financial position.

NOTE 12—DISCONTINUED OPERATIONS

In the fourth quarter of 2008 and during the first quarter of 2009, Toreador farmed out or sold all of its working interests in Romania to three different companies and closed its office; thus, we no longer have any operational involvement in Romania. This resulted in a financial gain of $5.8 million which was recorded in the first quarter of 2009. All revenues and expenses associated with the Romanian operation for the three months ended September 30, 2009 and 2008 and for the nine months ended September 30, 2009 and 2008 have been included in discontinued operations.

In February 2009, the Board of Directors authorized management to retain Stellar Energy Advisors, based in London, UK, to manage a process to monetize its wholly owned subsidiary, Toreador Turkey, including the Company's remaining 10% interest in the SASB, in addition to the onshore production, and 2.2 million net acres in exploration licenses that are currently held in Turkey. On September 30, 2009, the Company entered into the Share Purchase Agreement with Tiway, pursuant to which the Company agreed to sell 100% of the outstanding shares of Toreador Turkey to Tiway. The sale of Toreador Turkey was completed on October 7, 2009. All revenues and expenses associated with the Turkish operation, including the dry hole cost of the Durusu #1 well of $1.3 million and impairment expense of $5.3 million, for the three months ended September 30, 2009 and 2008 and for the nine months ended September 30, 2009 and 2008 have been included in discontinued operations.

Additionally, on September 30, 2009, the Company entered into the Quota Purchase Agreement with RAG, pursuant to which the Company agreed to sell 100% of its equity interests in Toreador Hungary to RAG. The sale of Toreador Hungary was completed on September 30, 2009. This resulted in a financial loss of $4.2 million which was recorded in the third quarter of 2009.Therefore, all expenses associated with the Hungarian operation for the three months ended September 30, 2009 and 2008 and for the nine months ended September 30, 2009 and 2008 have been included in discontinued operations.

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 12—DISCONTINUED OPERATIONS (Continued)

The results of operations of assets in Romania, Turkey and Hungary have been presented as discontinued operations in the accompanying consolidated statement of operations. Results for these assets reported as discontinued operations were as follows:

		Three Months Ended September 30,						Nine Months Ended September 30,

		2009			2008			2009			2008
Revenue:
	Oil and natural gas sales	$	1,632		$	8,054		$	4,545		$	22,062
Operating costs and expenses:
	Lease operating expense		381			2,477			886			6,277
	Exploration expense		136			756			868			1,979
	Dry hole costs		1,318			—			1,318			—
	Depreciation, depletion and amortization		52			8,788			157			26,463
	Impairment of oil and natural gas properties		5,425			—			10,725			53,479
	General and administrative expense		1,720			580			3,424			2,045
	(Gain) loss on sale of properties and other assets		4,171			—			(1,675	)		—

	Total operating costs and expenses		13,203			12,601			15,703			90,243

	Operating loss		(11,571	)		(4,547	)		(11,158	)		(68,181	)
Other income (expense)
Foreign currency exchange gain			1,190			1,608			3,822			1,953
	Interest and other income		18			261			414			395
	Loss on early extinguishment of debt—revolving credit facility		—			—			(4,881	)		—
	Interest expense		(155	)		(1,030	)		(185	)		(3,266	)

Net loss before income taxes			(10,518	)		(3,708	)		(11,988	)		(69,099	)
Income tax provision (benefit)			—			19			—			(2,871	)

Loss from discontinued operations		$	(10,518	)	$	(3,727	)	$	(11,988	)	$	(66,228	)

The assets and liabilities of discontinued operations presented separately under the captions "Oil and natural gas properties, net, held for sale", "Other assets held for sale" and "Liabilities held for sale" in balance sheets for the periods ended September 30, 2009 and December 31, 2008 are valued at

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 12—DISCONTINUED OPERATIONS (Continued)

the lower of cost or fair value less cost of selling such assets. The table below shows the components of the other assets held for sale and liabilities held for sale.

			September 30, 2009		December 31, 2008

			(Unaudited)
Current assets:
	Cash		$	2,203	$	7,519
	Accounts receivable			5,811		4,392
	Other			6,963		1,567

		Total current assets		14,997		13,478

Other assets				394		1,485

		Other assets held for sale	$	15,371	$	14,963

Current liabilities:
	Accounts payable and accrued liabilities		$	2,764	$	9,223
	Deferred lease payable			—		115
	Asset retirement obligations			—		2,028

		Liabilities held for sale	$	2,764	$	11,366

NOTE 13—DERIVATIVES

We periodically utilize derivative instruments such as futures and swaps for purposes of hedging our exposure to fluctuations in the sales price of crude oil and natural gas. We entered into futures and swap contracts for approximately 16,000 Bbls per month for the months of January 2008 through September 2008. This resulted in a net derivative fair value gain of $2.4 million for the three months ended September 30, 2008 and a loss of $1.8 million for the nine months ended September 30, 2008. Presented in the table below is a summary of the contracts entered in 2008 and (gain) loss as of September 30, 2008:

Type	Period		Floor		Ceiling		(Gain) Loss

Collar	January 1 - March 31, 2008	48,000	$	84.75	$	92.75	$	19
Collar	April 1 - June 30, 2008	48,000	$	92.25	$	100.25		2,239
Collar	July 1 - September 30, 2008	48,000	$	91.75	$	99.75		(452	)

							$	1,806

On June 16, 2009, we entered into futures and swap contracts for approximately 18,000 Bbls per month for the months of July 2009 through December 2009. Presented in the table below is a summary

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 13—DERIVATIVES (Continued)

of the contracts entered into for the nine month period ended September 30, 2009 and gain as of September 30, 2009:

Type	Period		Floor		Ceiling		Gain

Collar	July 1 - September 30, 2009	55,200	$	65.00	$	77.00	$	(7	)
Collar	October 1 - December 31, 2009	55,200	$	65.00	$	77.00		—

							$	(7	)

NOTE 14—FAIR VALUE MEASUREMENTS

The carrying amounts of financial instruments including cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate fair value, at September 30, 2009 and December 31, 2008, due to the short-term nature or maturity of the instruments.

Long-term debt approximated fair value based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same maturities.

On September 30, 2009, the convertible subordinate notes which had a book value of $63.6 million, were trading at $965.00, which would equal a fair market value of approximately $61.4 million.

On December 31, 2008 the convertible subordinate notes which had a book value of $80.28 million, were trading at $770.00, which would equal a fair market value of approximately $61.8 million.

The Company establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three levels, in accordance with the provisions of FASB Accounting Standards Codification (ASC) 820, "Fair Value Measurements and Disclosures." The fair value hierarchy gives the highest priority to quoted market prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 inputs are inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly.

Certain assets and liabilities are reported at fair value on a non-recurring basis in our consolidated balance sheets. The following methods and assumptions were used to estimate the fair values:

Oil and Gas Properties Held for Sale—In February 2009, the Board of Directors authorized management to retain Stellar Energy Advisors, based in London, UK, to manage a process to monetize its wholly owned subsidiary, Toreador Turkey Limited, including the Company's remaining 10% interest in the SASB, in addition to the onshore production, and 2.2 million net acres in exploration licenses that are currently held in Turkey. These properties are valued at the lower of cost or fair value less selling expenses.

Asset Impairments—In accordance with the provisions of FASB Accounting Standards Codification (ASC) 360, , "Property, Plant and Equipment," we review a proved oil and gas property for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying value of

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 14—FAIR VALUE MEASUREMENTS (Continued)

such property. We estimate the undiscounted future cash flows expected in connection with the property and compare such undiscounted future cash flows to the carrying amount of the property to determine if the carrying amount is recoverable. If the carrying amount of the property exceeds its estimated undiscounted future cash flows, the carrying amount of the property is reduced to its estimated fair value. Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two. In the discounted cash flow method, estimated future cash flows are based on management's expectations for the future and include estimates of future oil and gas production, commodity prices based on commodity futures price strips as of the date of the estimate, operating and development costs, and a risk-adjusted discount rate.

Goodwill—We account for goodwill in accordance with the provisions of FASB Accounting Standards Codification (ASC) 350, "Intangibles Goodwill and Other," . Goodwill and indefinite-lived intangible assets are not amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment.

Asset Retirement Obligations—We estimate the fair values of asset retirement obligations (AROs) on initial recognition based on discounted cash flow projections using numerous estimates, assumptions and judgments regarding such factors as the existence of a legal obligation for an ARO; estimated probabilities, amounts and timing of settlements; the credit-adjusted risk-free rate to be used; and inflation rates. See Note 6—Asset Retirement Obligations for a summary of changes in AROs.

Measurement information for assets that are measured at fair value on a non-recurring basis was as follows:

			Fair Value Measurements Using

Description	Fair Value Measurement		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Impairment Loss
	(in millions)
Nine months Ended September 30, 2009
Impaired oil and natural gas properties	$	16,507		—		—	$	16,507	$	(10,725	)

NOTE 15—IMPAIRMENT OF ASSETS

We evaluate producing property costs for impairment and reduce such costs to fair value if the sum of expected undiscounted future cash flows is less than net book value pursuant to the provisions of FASB Accounting Standards Codification (ASC) 360, "Property, Plant and Equipment". We assess impairment of non-producing leasehold costs and undeveloped mineral and royalty interests periodically on a field-by-field basis. We charge any impairment in value to expense in the period incurred. For the nine months ended September 30, 2009, we incurred an impairment charge of $10.7 million on our natural gas properties in Turkey and Hungary which is included in discontinued operations.

The impairment charge in Turkey of $5.3 million is a result of a decline in the fair market value of the Company's interest in South Akcakoca Sub-Basin assets, which was recorded in the first quarter of

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 15—IMPAIRMENT OF ASSETS (Continued)

2009. The fair market value decline was due to a 25% reduction in the posted sales price of natural gas produced in Turkey announced on May 1, 2009.

In the third quarter of 2009, the Company decided not to proceed with the construction of the Kiha pipeline in Hungary, due to the poor results of the Tompa Deep well and the impending sale of Toreador Hungary, which was completed on September 30, 2009. This resulted in an impairment of $5.4 million which represented our share of costs capitalized for the pipeline and the previously drilled Kiha 15 well.

NOTE 16—RELOCATION OF HEADQUARTERS AND EMPLOYEE TERMINATIONS

As of June 30, 2009 the Company has completed the relocation of its headquarters from Dallas, Texas to Paris, France.

On March 17, 2009, Toreador provided notice to 16 employees whose employment was terminated on such date or whose employment will be terminated in connection with the expected relocation of our headquarters to Paris. As of June 30, 2009 the relocation and closing of the Dallas operations was complete, with certain employees entitled to receive financial incentives because the relocation was completed by June 30, 2009. With regard to severance payments made, upon the receipt from each severed employee of an executed release of all present and future claims, Toreador has paid an aggregate of $158,000 in cash and issued an aggregate of 367,000 shares of Toreador common stock. In addition, upon certain milestones associated with the relocation having been met, an additional aggregate of $120,752 in stock was distributed to certain employees. In accordance with the provisions of FASB Accounting Standards Codification (ASC) 420, "Exit or Disposal Cost Obligations", the costs associated with the involuntary termination benefits were recognized during the three month period ended March 31, 2009 with respect to those employees terminated prior to March 31, 2009 and costs associated with certain employees required to remain with the Company longer than 60 days are recognized over the minimum service period.

As of September 30, 2009 we had $4.2 million of costs associated with the Dallas office/relocation of our headquarters to Paris, France. In connection with the relocation of our corporate headquarters to France, additional material charges may be incurred, the amount of which Toreador cannot reasonably estimate at this time, but which will likely include continuing rental obligations for the Dallas office, subject to any reductions due to any subleases, and other relocation costs.

NOTE 17—SALE OF TOREADOR HUNGARY

On September 30, 2009, the Company entered into the Quota Purchase Agreement with RAG, pursuant to which the Company agreed to sell 100% of its equity interests in Toreador Hungary to RAG for total consideration consisting of (1) a cash payment of €3.7 million (US$5.4 million) paid at closing, (2) US$435,000 (€300,000), which was held back and is subject to a post-closing adjustment, and (3) a contingent payment of US$2.9 million (€2 million) to be paid upon post-transaction completion of agreements relating to certain assets of Toreador Hungary. The sale of Toreador Hungary was completed on September 30, 2009 and resulted in a financial loss of $4.2 million or $0.20 loss per share for the nine months ended September 30, 2009.

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 17—SALE OF TOREADOR HUNGARY (Continued)

The contingent consideration of $435,000 which was held back and is subject to a post-closing adjustment and the $2.9 million which may be paid upon post-transaction completion of agreements relating to certain assets of Toreador Hungary will be recorded as gain on the sale if and when the funds are received.

NOTE 18—SUBSEQUENT EVENTS

The Company evaluated its September 30, 2009 financial statements for subsequent events through the date the financial statements were issued which was November 9, 2009. The following items require recognition or disclosure in the financial statements.

On September 30, 2009, the Company entered into the "Share Purchase Agreement with Tiway, pursuant to which the Company agreed to sell 100% of the outstanding shares of Toreador Turkey to Tiway for total consideration consisting of: (1) a cash payment of $10.6 million to be paid at closing (subject to a post-closing adjustment), (2) exploration success payments dependent upon certain future commercial discoveries as provided in the Share Purchase Agreement, up to a maximum aggregate consideration of $40 million, and (3) future quarterly 10% pre-tax net profit interest payments if a field goes into production that was discovered by an exploration well drilled within four years of closing on certain of the licenses then still held by Tiway. The sale of Toreador Turkey was completed on October 7, 2009.

In October 2009, we repurchased $9 million principal amount of the Notes on the open market and through privately negotiated transactions for $8.7 million plus accrued interest and prepaid loan fees of $340,000. This repurchase resulted in a loss of $26,000 on the early extinguishment of debt which will be recorded in the fourth quarter of 2009.

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ITEM 2—MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion is intended to assist you in understanding our business and results of operations together with our present financial condition. This section should be read in conjunction with our Consolidated Financial Statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the year ended December 31, 2008, which was initially filed with the SEC on March 16, 2009 and amended on April 16, 2009. Certain prior-year amounts have been reclassified and adjusted to conform to the 2009 presentation and to present the operations of Turkey, Hungary and Romania as discontinued operations.

DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this report may constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. When used in this report, the words "anticipates," "estimates," "plans," "believes," "continues," "expects," "projections," "forecasts," "intends," "may," "might," "will," "would," "could," "should," and similar expressions are intended to be among the statements that identify forward-looking statements. The factors that may affect our expectations regarding our operations include, among others, the following:

•: our success in development, exploitation and exploration activities;
•: our ability to make planned capital expenditures;
•: declines in our production of crude oil;
•: prices for crude oil;
•: our ability to raise equity capital or incur additional indebtedness;
•: economic and business conditions;
•: political and economic conditions in oil producing countries;
•: price and availability of alternative fuels;
•: our acquisition and divestiture activities;
•: results of our hedging activities; and
•: other factors discussed elsewhere in this document.

In addition to these factors, important factors that could cause actual results to differ materially from our expectations ("Cautionary Statements") are disclosed under "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2008, initially filed with the SEC on March 16, 2009 and amended on April 16, 2009, which are incorporated by reference herein.

All written and oral forward-looking statements attributable to us are expressly qualified in their entirety by the Cautionary Statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

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EXECUTIVE OVERVIEW

We are an independent international energy company engaged in the acquisition, exploration, development and production of crude oil. We hold interests in developed and undeveloped oil properties in France and are currently focused on developing the conventional exploration of our French acreage and unconventional exploitation of the Paris Basin Oil Shale. Our financial results depend upon many factors that significantly affect our results of operations including the following:

•: the sales price of crude oil;
•: the level of total sales volumes of crude oil;
•: the availability of, and our ability to raise additional capital resources and provide liquidity to meet, cash flow needs;
•: the level of and interest rates on borrowings; and
•: the level and success of exploration and development activity.

During 2008, we saw oil prices rise to unprecedented levels. Then in September 2008 we saw the start of a deterioration in the credit and equity markets, which continued further in the beginning of 2009 before recovering somewhat later in the year. In early to mid-2009 we also experienced a 50% - 60% decline in oil prices from the highest point received in 2008. Although oil prices have begun to rebound, oil prices are, and we expect, will continue to be, extremely volatile for the remainder of the fiscal year 2009. The results of our operations are highly dependent upon the prices received from our oil production, which are dependent on numerous factors beyond our control. Accordingly, significant changes to oil prices are likely to have a material impact on our financial condition, results of operation, cash flows and revenue. As discussed further below, these severe economic conditions have caused the Company to reevaluate its capital expenditure program for 2009 and how the Company will operate on a go forward basis.

In February 2009, we developed a corporate platform that was the building block of our new corporate strategy that was presented at the Annual Shareholder Meeting in June 2009. The Board of Directors and management are committed to restoring shareholder value, exercising financial discipline, transparency in all transactions, assessing strategic alternatives that lay outside and beyond the platform and strengthening the Company during the current economic crisis.

We believe that the following proactive steps will be the base for the future growth of the Company:

•: The sale of a 26.75% interest in the SASB to Petrol Ofisi for aggregate cash consideration of $55 million, $50 million of which was funded on March 3, 2009, with the remaining $5 million paid by Petrol Ofisi to us on September 1, 2009;
•: A portion of the net proceeds of the sale of the 26.75% interest in the SASB to Petrol Ofisi have been used to fully repay and retire the credit facilities with the International Finance Corporation;
•: The sale of Toreador Hungary on September 30, 2009, for total consideration consisting of (1) a cash payment of US$5.4 million (€3.7 million) paid at closing, (2) US$435,000 (€300,000), which was held back and is subject to a post-closing adjustment, and (3) a contingent payment of US$2.9 million (€2 million) to be paid upon post-transaction completion of agreements relating to certain assets of Toreador Hungary;
•: The sale of Toreador Turkey on October 7, 2009 for total consideration consisting of: (1) a cash payment of $10.6 million to be paid at closing (subject to a post-closing adjustment), (2) exploration success payments dependent upon certain future commercial discoveries as

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provided in the Share Purchase Agreement, up to a maximum aggregate consideration of $40 million, and (3) future quarterly 10% pre-tax net profit interest payments if a field goes into production that was discovered by an exploration well drilled within four years of closing on certain of the licenses then still held by Tiway;

•: In April 2009, we repurchased $16.7 million principal amount of the Convertible Senior Notes on the open market and through privately negotiated transactions for $12.7 million plus accrued interest and prepaid loan fees of $650,000. This repurchase resulted in a gain of $3.4 million on the early extinguishment of debt which was recorded in the second quarter of 2009. Additionally, in October 2009, we repurchased $9 million principal amount of the Convertible Senior Notes on the open market and through privately negotiated transactions for $8.7 million plus accrued interest and prepaid loan fees of $340,000. This repurchase resulted in a loss of $26,000 on the early extinguishment of debt which will be recorded in the fourth quarter of 2009;
•: A share buyback program was adopted by the Board of Directors in February 2009 for the repurchase of up to 1 million shares of Toreador common stock that may be repurchased in the open market at any time over the next 12 months. As of September 30, 2009, no shares of Toreador common stock have been repurchased pursuant to the share buyback program;
•: As of June 30, 2009, the Company has completed the relocation of its headquarters from Dallas, Texas to Paris;
•: The Company expects that the Paris Basin will remain the Company's core asset with current production of approximately 900 net barrels per day coming from low-decline, long-life assets. A comprehensive portfolio review of our fields and 649,000 net acres held pursuant to licenses continues and an additional 154,000 that are pending permitting. The results of the study will be used to launch the three-year strategic plan that was announced at the Annual Stockholders Meeting in June 2009;
•: On June 16, 2009 we entered into futures and swap contracts for approximately 18,000 Bbls per month for the months of July 2009 through December 2009 with a floor price of $65.00 per Bbl and a ceiling of $77.00 per Bbl.;
•: A rig contract has been signed to drill the La Garenne well, in France, on the 100% owned Rigny le Ferron permit and is scheduled to spud late November pending regulatory approvals. The well is an updip test of the nearby Flacy 1 and 2 oil discoveries made and produced in the 1980's. The well has the potential of proving between 6-30 mmbo of oil in place.

Financial Summary

For the nine months ended September 30, 2009:

•: We had revenues from continuing operations of $13.1 million.
•: Operating costs from continuing operations were $24.2 million.
•: Loss from discontinued operations, net of income taxes, was $12 million.
•: Net loss available to common shares was $20.5 million.
•: Production was 248 MBOE.
•: Capital expenditures were $5 million.

At September 30, 2009:

•: Cash of $10.6 million.
•: We had a current ratio of 4.07 to 1.

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•: We had a debt to equity ratio of 2.02 to 1.
•: Oil and natural gas properties held for sale of $16.5 million, which reflects a $5.3 million impairment (discontinued operations shown on the statement of operations), recorded at March 31, 2009, of our SASB field in offshore Turkey due to the 25% reduction in the posted price of natural gas announced on May 1, 2009. In the third quarter we recorded $1.3 million to dry hole costs for the Durusu #1 well. We believe that this amount represents the fair value, less selling cost, of our remaining 10% interest in the SASB, in addition to our onshore production, and 2.2 million net acres in exploration licenses that are currently held in Turkey.
•: In September we closed on the sale of Toreador Hungary which resulted in a financial loss of $4.2 million. Additionally, we recorded an impairment of the Kiha pipeline and related well costs of $5.4 million. Both of these amounts are classified as discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

This section should be read in conjunction with Note 5 to Notes to Consolidated Financial Statements included in this filing.

Liquidity

The Company's liquidity depends on cash flow from operations and existing cash resources. As of September 30, 2009, we had cash of $10.6 million, a current ratio of approximately 4.07 to 1 and a debt to equity ratio of 2.02 to 1. For the nine months ended September 30, 2009, we had an operating loss of $11.1 million and capital expenditures were $5 million.

During 2008, we saw oil prices rise to unprecedented levels. Then in September 2008 we saw the start of a deterioration in the credit and equity markets, which continued further in the beginning of 2009 before recovering somewhat later in the year. In early to mid-2009 we also experienced a 50% - 60% decline in oil prices from the highest point received in 2008. Although oil prices have begun to rebound, oil prices are, and we expect, will continue to be, extremely volatile for the remainder of the fiscal year 2009. In order to reduce our vulnerability to crude oil price fluctuations, we have entered into a collar for approximately 18,000 Bbls per month for the months of July 2009 through December 2009. This transaction sets the floor at $65.00 per Bbl and the ceiling at $77.00 per Bbl.

As discussed further below, for the year ended December 31, 2008, we had a downward reserves revision of 37.41%. At December 31, 2007 the price used for evaluating our oil reserves was $95.72 per barrel as compared to the December 31, 2008 price of $34.29 per barrel. This 64% decrease in oil price had a severe impact on the economic life of our wells, but also on the discounted present value at 10% and the standardized measure or proved reserves. As discussed further below, these severe economic conditions have caused the Company to reevaluate its capital expenditure program for 2009 and how the Company will operate on a go forward basis.

In June 2009, the Company announced its strategy for the next three years at the Annual Shareholder Meeting. The strategy is built on: (i) reduction in overhead—through relocating our corporate headquarters to Paris, France, significant savings of general and administrative expense due to a consolidation of job functions and the sale of all the Company's remaining interest in Turkey; (ii) uses of cash—other than funding our capital program to meet minimum commitments associated with the Company's licenses, we expect that our primary use of discretionary cash will be used to reduce debt; (iii) a focused oil portfolio review—the Company will refocus its efforts to those areas that offer the best chance of success and have a proven infrastructure for the oil industry. We believe that our current acreage position in France can serve as the platform for growth and offer the Company the best opportunity to create stockholder value; and (iv) performance management—the

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Board of Directors and management are committed to the best practices in corporate governance and will continually be reviewing and where necessary revising the procedures used to operate the Company. We intend to use third party expertise to review and challenge our procedures and methodologies, both operationally and administratively. Also performance management, actions followed by positive results, will become a driving principle in operating the Company.

On March 3, 2009, we completed the sale of a 26.75% interest in the SASB to Petrol Ofisi for $55 million. In accordance with the agreement, $50 million of the proceeds was paid by Petrol Ofisi upon closing and the remaining $5 million was paid on September 1, 2009. Simultaneous with the closing of the sale of the 26.75% interest in the SASB to Petrol Ofisi, we repaid the secured revolving credit facility with the International Finance Corporation. The total amount of the payment was $36.4 million, which was comprised of $30 million principal, $5.9 million additional compensation due under the credit facility as a result of our repayment (such additional compensation calculated under the terms of the credit facility as a percentage of the Company's earnings before interest, tax, depreciation, amortization, and exploration expense) and $500,000 for accrued interest and fees. As a result of the early extinguishment, we recorded a loss of $4.9 million for the nine months ended September 30, 2009, which was recorded in discontinued operations. Following the retirement of the credit facility with the International Finance Corporation, the Company does not have a credit facility and currently relies on its cash balance to meet its immediate cash requirements. Management will seek to secure a new facility in 2009, but given the current economic and financial market conditions due to the global credit market crisis, there can be no assurance that a new facility can be obtained on acceptable terms or at all.

On September 30, 2009, we completed the sale of Toreador Hungary for total consideration consisting of (1) a cash payment of US$5.4 million (€3.7 million) paid at closing, (2) US$435,000 (€300,000), which was held back and is subject to a post-closing adjustment, and (3) a contingent payment of US$2.9 million (€2 million) to be paid upon post-transaction completion of agreements relating to certain assets of Toreador Hungary.

On October 7, 2009, we completed the sale of Toreador Turkey for total consideration consisting of: (1) a cash payment of $10.6 million to be paid at closing (subject to a post-closing adjustment), (2) exploration success payments dependent upon certain future commercial discoveries as provided in the Share Purchase Agreement, up to a maximum aggregate consideration of $40 million, and (3) future quarterly 10% pre-tax net profit interest payments if a field goes into production that was discovered by an exploration well drilled within four years of closing on certain of the licenses then still held by Tiway.

Our capital expenditure budget for 2009 is currently estimated at $8.3 million, which includes $5 million of capital expenditures incurred through September 30, 2009 for our share of capital costs incurred in Turkey and Hungary prior to the sale of those entities and approximately $3.3 million for the drilling of the La Garenne exploratory well in France.

As discussed in Note 11, on April 30, 2009, the Company received a letter from attorneys representing Netherby claiming that Toreador's sale of its 26.75% interest in the SASB to Petrol Ofisi in March 2009 and Toreador's proposed sale of its remaining 10% interest in the SASB constitute a breach of the Netherby Agreement and demanding a $10.4 million payment. Toreador does not believe that Netherby is entitled to the $10.4 million claimed, though no formal legal evaluation of the likely outcome of this claim can be made at this time. Additionally, the Company believes the claim is baseless, without merit and will be vigorously defended against.

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sale of Toreador's interests in the SASB to Petrol Ofisi in March 2009. The complaint also alleges unjust enrichment/quantum meruit and fraud. Scowcroft is seeking damages in the amount of $2 million plus interest, costs and expenses. On July 24, 2009, the Company filed a motion to dismiss the complaint. The district court denied the Company's motion to dismiss the action on October 26, 2009. The Company's answer is due by November 20, 2009. The Company believes the lawsuit lacks merit and intends to continue vigorously defending itself.

We believe we will have sufficient cash flow from operations to meet all of our 2009 obligations. However, if the cash flow from our operations is less than anticipated and if we have used up our cash we may also seek additional capital by: (i) forward selling our crude oil production; (ii) selling our working interest in properties; or (iii) a combination of these actions in addition to issuing new debt or equity securities. Management is also seeking to secure a new credit facility, though there is no guarantee that the Company will be able to obtain a new credit facility on satisfactory terms, if at all. We believe such actions will allow us to meet our capital commitments and that as a result, we will have sufficient liquidity for the remainder of 2009.

Secured Revolving Facility

On December 28, 2006, we entered into a loan and guarantee agreement with International Finance Corporation. The loan and guarantee agreement provided for a $25 million facility which was a secured revolving facility with a maximum facility amount of $25 million which maximum facility amount would have increased to $40 million when the projected total borrowing base amount exceeds $50 million. The $25 million facility funded on March 2, 2007. The loan and guarantee agreement also provided for an unsecured $10 million facility which funded on December 28, 2006. Both the $25 million facility and the $10 million facility were used to fund our operations in Turkey and Romania.

5% Convertible Senior Notes Due 2025

On September 27, 2005, we sold $75 million of Convertible Senior Notes due October 1, 2025 to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933. We also granted the initial purchasers the option to purchase an additional $11.25 million aggregate principal amount of Convertible Senior Notes to cover over-allotments. The option was exercised on September 30, 2005. The total principal amount of Convertible Senior Notes issued was $86.25 million and total net proceeds were approximately $82.2 million.

The Convertible Senior Notes bear interest at a rate of 5% per annum and can be converted into common stock at an initial conversion rate of 23.3596 shares of common stock per $1,000 principal amount of Convertible Senior Notes, subject to adjustment (equivalent to a conversion price of approximately $42.81 per share). We may redeem the Convertible Senior Notes, in whole or in part, on or after October 6, 2008, and prior to October 1, 2010, for cash at a redemption price equal to 100% of the principal amount of Convertible Senior Notes to be redeemed, plus any accrued and unpaid interest, if the closing price of our common stock exceeds 130% of the conversion price over a specified period. On or after October 1, 2010, we may redeem the Convertible Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Convertible Senior Notes to be redeemed, plus any accrued and unpaid interest, irrespective of the price of its common stock.

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Holders may convert their Convertible Senior Notes at any time prior to the close of business on the business day immediately preceding their stated maturity, and holders may, upon the occurrence of certain fundamental changes, and on October 1, 2010, October 1, 2015, and October 1, 2020, require us to repurchase all or a portion of their Convertible Senior Notes for cash in an amount equal to 100% of the principal amount of such Convertible Senior Notes, plus any accrued and unpaid interest.

In April 2009, we repurchased $16.7 million in principal amount of the Convertible Senior Notes on the open market for $12.7 million plus accrued interest and prepaid loan fees of $650,000. This repurchase resulted in a gain of $3.4 million on the early extinguishment of debt which was recorded in the second quarter of 2009. In October 2009, we repurchased $9 million principal amount of the Convertible Senior Notes on the open market and through privately negotiated transactions for $8.7 million plus accrued interest and prepaid loan fees of $340,000. This repurchase resulted in a loss of $26,000 on the early extinguishment of debt which will be recorded in the fourth quarter of 2009.

We intend to continue to buy back a portion of the currently outstanding Convertible Senior Notes on the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors.

Under the terms of the Indenture, the Company may be required on October 1, 2010 to repurchase at the option of the Holders the principal amount outstanding of the Convertible Senior Notes (up to approximately an aggregate of $63.6 million as at September 30, 2009). If the Holders exercise their right to require the Company to repurchase the Convertible Senior Notes, the Company expects that it may need to secure new financing or raise additional capital through the issuance of securities to satisfy such payment obligation. If the Company is unable to generate sufficient cash flow to satisfy its obligations, it may also seek additional capital by: (i) forward selling its crude oil; (ii) selling its working interest in properties; or (iii) a combination of these actions, in addition to seeking financing or issuing new debt or equity securities. The Company's management is currently is seeking to secure a new credit facility; however, there is no guarantee that the Company will be able to obtain a new credit facility on satisfactory terms, if at all. There is no assurance that any such transactions will be completed, in which case the Company may not have sufficient liquid resources to satisfy its payment obligation with respect to the Convertible Senior Notes. An inability to access replacement or additional sources of liquidity to fund our cash needs or fund the repayment of the Senior Convertible Notes if the Holders exercise their repurchase rights could adversely affect our growth, our financial condition, our results of operations. It will be more difficult to obtain additional financing if prevailing instability in the credit and financial markets continues.

Dividend

Dividends on our common stock may be declared and paid out of funds legally available when and as determined by our Board of Directors. Our policy is to hold and invest corporate funds on a conservative basis, and, thus, we do not anticipate paying cash dividends on our common stock in the foreseeable future.

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Contractual Obligations

The following table sets forth our contractual obligations in thousands at September 30, 2009 for the periods shown:

	Total		Less Than One Year		One to Three Years		Four to Five Years		More Than Five Years

Long-term debt	$	63,592	$	—	$	63,592	$	—	$	—
Lease commitments		2,276		358		1,310		608		—

Total contractual obligations	$	65,868	$	358	$	64,902	$	608	$	—

Contractual obligations for long-term debt above does not include amounts for interest payments.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Our significant accounting policies are described in Note 2 to our consolidated financial statements included in Form 10-K for the year ended December 31, 2008. We have identified below policies that are of particular importance to the portrayal of our financial position and results of operations and which require the application of significant judgment by management. We analyze our estimates on a periodic basis and base our estimates on experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates using different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

Successful Efforts Method of Accounting

We account for our oil and natural gas exploration and development activities utilizing the successful efforts method of accounting. Under this method, costs of productive exploratory wells, development dry holes and productive wells and undeveloped leases are capitalized. Oil and natural gas lease acquisition costs are also capitalized. Exploration costs, including personnel costs, certain geological and geophysical expenses and delay rentals for oil and natural gas leases, are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but such costs are charged to expense if and when the well is determined not to have found reserves in commercial quantities. In most cases, a gain or loss is recognized for sales of producing properties.

The application of the successful efforts method of accounting requires management's judgment to determine the proper designation of wells as either developmental or exploratory, which will ultimately determine the proper accounting treatment of the costs incurred. The results from a drilling operation can take considerable time to analyze, and the determination that commercial reserves have been discovered requires both judgment and application of industry experience. Wells may be completed that are assumed to be productive and actually deliver oil and natural gas in quantities insufficient to be economic, which may result in the abandonment of the wells at a later date. On occasion, wells are drilled which have targeted geologic structures that are both developmental and exploratory in nature, and in such instances an allocation of costs is required to properly account for the results. Delineation seismic costs incurred to select development locations within a productive oil and natural gas field are typically treated as development costs and capitalized, but often these seismic programs extend beyond the proved reserve areas and therefore management must estimate the portion of seismic costs to expense as exploratory. The evaluation of oil and natural gas leasehold acquisition costs requires management's judgment to estimate the fair value of exploratory costs related to drilling activity in a

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given area. Drilling activities in an area by other companies may also effectively condemn leasehold positions.

The successful efforts method of accounting can have a significant impact on the operational results reported when we enter a new exploratory area in hopes of finding oil and natural gas reserves. The initial exploratory wells may be unsuccessful and the associated costs will be expensed as dry hole costs. Seismic costs can be substantial which will result in additional exploration expenses when incurred.

Reserves Estimate

Proved reserves are estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods as well as oil and natural gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery after testing by a pilot project or after the operation of an installed program has been confirmed through production response that increased recovery will be achieved. Proved undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. Proved undeveloped reserves on undrilled acreage are limited: (i) to those drilling units offsetting productive units that are reasonably certain of production when drilled and (ii) to other undrilled units where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. We emphasize that the volume of reserves are estimates that, by their nature are subject to revision. The estimates are made using geological and reservoir data, as well as production performance data. These estimates are reviewed annually and revised, either upward or downward, as warranted by additional performance data. These reserve revisions result primarily from improved or a decline in performance from a variety of sources such as an addition to or a reduction in recoveries below or above previously established lowest known hydrocarbon levels, improved or a decline in drainage from natural drive mechanisms, and the realization of improved or declined drainage areas. If the estimates of proved reserves were to decline, the rate at which we record depletion expense would increase.

For the year ended December 31, 2008, we had a downward reserve revision of 37.41%. At December 31, 2007 the price used for evaluating our oil reserves was $95.72 per barrel as compared to the December 31, 2008 price of $34.72 per barrel. This 64% decrease in oil price had a severe impact on the economic life of our wells, but also on the discounted present value at 10% and the standardized measure of proved reserves. This downward revision, which primarily affected our French oil reserves, was due to the following factors: (i) decrease in economic life due to change in economics caused a net decrease of 1,682 MBbl; (ii) removing 12 proved undeveloped locations from the report caused a net decrease 1,889 MBbl; (iii) negative reserve revisions resulted in a decrease in reserves of 405 MBbl; (iv) 14 wells were shut-in resulting in a decrease of 401 MBbl; (v) three drilled locations in prior years resulted in one producing well which was non-commercial at December 31, 2008 causing a net decrease of 280 MBbl; (vi) one well was lost during workover operations causing a net decrease 37 MBbl; (vii) 2008 production of 805 MBOE. In Hungary, we were able to secure a gas contract and were able to restore the reserves lost in 2007; this resulted in an increase of 159 MBOE and in Romania due to the poor performance of the field resulted in a decrease of 54 MBOE. In Turkey, we had downward revisions of 390 MBOE, which was due to a decrease in the economic life of the proved developed wells.

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The following table shows our reserves at December 31, 2008, as if the sale of Hungary and Turkey had occurred on that date:

	December 31, 2008		Proved Reserves Sold			Pro Forma at December 31, 2008

Proved developed:
Oil (MBbl)		4,887		(502	)		4,385
Gas (MMcf)		3,473		(3,473	)		—
Total (MBOE)		5,466		(1,081	)		4,385
Proved undeveloped:
Oil (MBbl)		770		(240	)		530
Gas (MMcf)		8,040		(8,040	)		—
Total (MBOE)		2,110		(1,580	)		530
Total proved:
Oil (MBbl)		5,657		(742	)		4,915
Gas (MMcf)		11,513		(11,513	)		—
Total (MBOE)		7,576		(2,661	)		4,915
Discounted present value at 10% (pretax) (in thousands)(1)	$	61,321	$	(36,214	)	$	25,107
Standardized measure of proved reserves (in thousands)	$	54,662	$	(36,205	)	$	18,563

(1): The discounted present value represents the discounted future cash flows attributable to our proved oil and natural gas reserves before income tax, discounted at 10%. Although it is a non-GAAP measure, we believe that the presentation of the discounted present value is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves prior to taking into account corporate future income taxes and our current tax structure. We use this measure when assessing the potential return on investment related to our oil and natural gas properties. The standardized measure of discounted future net cash flows represents the present value of future cash flows attributable to our proved oil and natural gas reserves after income tax, discounted at 10%.

Impairment of Oil and Natural Gas Properties

We review our proved oil and natural gas properties for impairment on an annual basis or whenever events and circumstances indicate a potential decline in the recoverability of their carrying value. We estimate the expected future cash flows from our proved oil and natural gas properties and compare these future cash flows to the carrying value of the oil and natural gas properties to determine if the carrying value is recoverable. If the carrying value exceeds the estimated undiscounted future cash flows, we will adjust the carrying value of the oil and natural gas properties to its fair value in the current period. The factors used to determine fair value include, but are not limited to, estimates of reserves, future commodity prices, future production estimates, anticipated capital expenditures, and a discount rate commensurate with the risk associated with realizing the expected cash flows projected. Unproved properties are reviewed quarterly to determine if there has been impairment of the carrying value, with any such impairment charged to expense in the period. Given the complexities associated with oil and natural gas reserves estimate and the history of price volatility in the oil and natural gas markets, events may arise that will require us to record an impairment of our oil and natural gas properties and there can be no assurance that such impairments will not be required in the future nor that they will not be material.

On May 1, 2009, the Prime Minister of Turkey, announced a 25% reduction in the posted price of natural gas in Turkey which caused us to reevaluate the fair value of our SASB and for management to

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estimate that the fair value of the asset has been impaired by approximately $5.3 million at March 31, 2009; accordingly, recorded an impairment to reflect this change in fair value.

In the third quarter of 2009, the Company decided not to proceed with the construction of the Kiha pipeline in Hungary, based on the poor results of the Tompa Deep well and the impending sale of Toreador Hungary, which was completed on September 30, 2009. This resulted in an impairment of $5.4 million which represented our share of costs capitalized for the pipeline and the previously drilled Kiha 15 well.

Future Development and Abandonment Costs

Future development costs include costs to be incurred to obtain access to proved reserves, including drilling costs and the installation of production equipment. Future abandonment costs include costs to dismantle and relocate or dispose of our production equipment, gathering systems, wells and related structures and restoration costs of land. We develop estimates of these costs for each of our properties based upon the type of production structure, depth of water, reservoir characteristics, depth of the reservoir, market demand for equipment, currently available procedures and consultations with construction and engineering consultants. Because these costs typically extend many years into the future, estimating these future costs is difficult and requires management to make estimates and judgments that are subject to future revisions based upon numerous factors, including changing technology, the ultimate settlement amount, inflation factors, credit adjusted discount rates, timing of settlement and changes in the political, legal, environmental and regulatory environment. We review our assumptions and estimates of future abandonment costs on an annual basis. The provisions of FASB Accounting Standards Codification (ASC) 410, "Asset Retirement and Enviromental Obligations", requires that the fair value of a liability for an asset retirement obligation be recorded in the period in which it is incurred and the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, a gain or loss is recognized.

Holding all other factors constant, if our estimate of future abandonment costs is revised upward, earnings would decrease due to higher depreciation, depletion and amortization expense. Likewise, if these estimates were revised downward, earnings would increase due to lower depreciation, depletion and amortization expense.

Income Taxes

For financial reporting purposes, we generally provide taxes at the rate applicable for the appropriate tax jurisdiction. Because our present intention is to reinvest the unremitted earnings in our foreign operations, excluding discontinued operations, we do not provide U.S. income taxes on unremitted earnings of foreign subsidiaries. Management periodically assesses the need to utilize these unremitted earnings to finance our foreign operations. This assessment is based on cash flow projections that are the result of estimates of future production, commodity prices and expenditures by tax jurisdiction for our operations. Such estimates are inherently imprecise since many assumptions utilized in the cash flow projections are subject to revision in the future.

Management also periodically assesses, by tax jurisdiction, the probability of recovery of recorded deferred tax assets based on its assessment of future earnings estimates. Such estimates are inherently imprecise since many assumptions utilized in the assessments are subject to revision in the future.

Derivatives

We periodically utilize derivative instruments such as futures and swaps for purposes of hedging our exposure to fluctuations in the price of crude oil. In accordance with the provisions of FASB

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Accounting Standards Codification (ASC) 815, "Derivitives and Hedging", we have elected not to designate the derivative financial instruments to which we are a party as hedges, and accordingly, we record such contracts at fair value and recognize changes in such fair value in current earnings as they occur. We determine the fair value of futures and swap contracts based on the difference between their fixed contract price and the underlying market price at the determination date. The realized and unrealized gains and losses on derivatives are recorded as a derivative fair value gain or loss in the income statement.

Foreign Currency Translation

The functional currency for Turkey and Hungary is the U.S. Dollar and in France the functional currency is the Euro. Translation gains or losses resulting from transactions in the New Turkish Lira in Turkey and the Forint in Hungary are included in loss from discontinued operations for the current period. Translation gains and losses resulting from transactions in Euros are included in other comprehensive income for the current period. We periodically review the operations of our entities to ensure the functional currency of each entity is the currency of the primary economic environment in which we operate.

RESULTS OF OPERATIONS

The discussion below, with the exception of the discussion under the heading "Discontinued Operations," relates to our corporate activities in the United States and France and oil exploration and production operations in France. Certain prior-year amounts have been reclassified and adjusted to conform to the 2009 presentation and to present the operations of Turkey, Hungary and Romania as discontinued operations and are discussed under the headings "Discontinued Operations."

COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

The following tables present production and average unit prices for the geographic segments indicated:

	For the Three Months Ended September 30

	2009		2008
Production:
Oil (MBbls):
France		83		89
Average Price:
Oil $(/Bbl):
France		62.19		108.00

Revenue

Oil sales

Oil sales for the three months ended September 30, 2009 were $5.2 million, as compared to $9.6 million for the three months ended September 30, 2008. This decrease is primarily due to the global decrease in oil prices during the three months ended September 30, 2009, as compared to the comparable period of 2008. This price decrease resulted in a decrease of revenue of $3.8 million. Additionally, we had a decrease in oil production of 6 MBbls as a result of wells being shut in for workovers and natural decline, resulting in a decrease in revenue of $600,000.

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The above table compares both volumes and prices received for oil for the three months ended September 30, 2009 and 2008. Oil prices are, and, we expect, will continue to be, extremely volatile for the remainder of the fiscal year 2009. The results of our operations are highly dependent upon our oil production and the prices received from our oil production, which are dependent on numerous factors beyond our control. Accordingly, significant changes to oil prices are likely to have a material impact on our financial condition, results of operation, cash flows and revenue.

Costs and expenses

Lease operating

Lease operating expense was $1.5 million, or $18.07 per BOE produced for the three months ended September 30, 2009, as compared to $2.3 million, or $26.15 per BOE produced, for the three months ended September 30, 2008. This decrease is primarily due to a reduction in the cost of services provided by third-party vendors due to current economic conditions and the delay in performing several workovers until a study of the best method to use is finalized.

Exploration expense

Exploration expense for the three months ended September 30, 2009 was $22,000, as compared to $170,000 for the three months ended September 30, 2008. This decrease is due primarily to the elimination of the exploration staff in the Dallas office due to the relocation of our headquarters to Paris.

Depreciation, depletion and amortization

Depreciation, depletion and amortization expense for the three months ended September 30, 2009 was $1.4 million or $16.87 per BOE produced, as compared to $1.2 million, or $13.43 per BOE produced for the three months ended September 30, 2008. This increase is primarily due to the lower proved reserves assigned to our French assets at December 31, 2008 due to depressed oil prices and was partially offset by the decline in oil production of 6 MBbls in the third quarter of 2009 as compared to the third quarter of 2008.

General and administrative before stock compensation, cost incurred due to resignation of former officers, costs associated with subsidiary sales and costs associated with the Dallas office/relocation of headquarters

General and administrative expense, not including stock compensation expense, cost incurred due to the resignation of former officers and the costs associated with the relocation of the corporate headquarters from Dallas, Texas to Paris, France, was $1.9 million for the three months ended September 30, 2009 compared with $1.8 million for the three months ended September 30, 2008.

Stock compensation expense

Stock compensation expense was $591,000 for the three months ended September 30, 2009 compared with $397,000 for the three months ended September 30, 2008. This increase is due to the change in the structure of Board compensation, effective beginning in 2009, whereby directors receive a greater portion of their compensation in stock rather than cash and a stock bonus that was granted to foreign office employees. The immediate vesting of grants made to employees in the Dallas office that have been terminated has been classified as "Cost associated with the Dallas office/relocation of corporate headquarters from Dallas, Texas to Paris, France" and are not reflected in this amount.

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Cost associated with subsidiary sales

For the three months ended September 30, 2009, we incurred $656,000 in legal and consulting expenses due to the sale of the Turkish and Hungarian subsidiaries.

Cost associated with the Dallas office/ relocation of corporate headquarters from Dallas, Texas to Paris, France

For the three months ended September 30, 2009 we had $1 million of costs associated with the Dallas office/ relocation of our headquarters to Paris, France. The major components are: 1) salaries and wages associated with Dallas office employees $95,000; 2) severance payments $265,000; 3) corporate restructuring expenses $126,000; 4) travel associated with Dallas office employees $33,000; 5) relocation costs $322,000 and 5) Dallas office rent $73,000.

For the three months ended September 30, 2008, we did not have any such relocation costs.

Gain on the early extinguishment of debt

In August 2008, we repurchased $5.5 million of the Convertible Senior Notes for $4.9 million plus accrued interest of $106,180. Additionally, we expensed $225,995 of prepaid loan fees that are attributable to the repurchased notes. This resulted in a $368,225 gain on the early extinguishment of debt. We intend to continue to buy back a portion of the currently outstanding Convertible Senior Notes in the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors.

For the comparable period in 2009, we did not repurchase any of the Convertible Senior Notes and did not record any gain on the early extinguishment of debt.

Gain (Loss) on oil derivative contracts

We recorded a gain on oil and gas derivative contracts for the three months ended September 30, 2009 of $7,000, as compared to a gain of $2.4 million for the three months ended September 30, 2008. The gain in 2008 represents the recognized gain on the commodity derivative contracts with Total Oil Trading. Presented in the table below is a summary of the contracts entered into:

Type		Period		Barrels			Floor			Ceiling			Gain

Collar		July 1 - September 30, 2008			48,000		$	91.75		$	99.75		$	2,405

The gain in 2009 represents the recognized gain on the commodity derivative contracts with Vitol S.A. Presented in the table below is a summary of the contracts entered into:

Type	Period		Floor		Ceiling		Gain

Collar	July 1 - September 30, 2009	55,200	$	65.00	$	77.00	$	7
Collar	October 1 - December 30, 2009	55,000	$	65.00	$	77.00		—

Foreign currency exchange gain (loss)

We recorded a gain on foreign currency exchange of $1,000 for the three months ended September 30, 2009 compared with a loss of $17,000 for the three months ended September 30, 2008. This increase is primarily due to the stabilization of the Euro in the third quarter of 2009 as compared to the second quarter of 2008.

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Interest and other income

Interest and other income was $250,000 for the three months ended September 30, 2009 as compared to interest and other income of $196,000 for the three months ended September 30, 2008. For the three months ended September 30, 2009, our average cash balance was larger than our average cash balance for the three months ended September 30, 2008.

Interest expense, net of interest capitalized

Interest expense was $616,000 for the three months ended September 30, 2009, as compared to $1.1 million for the three months ended September 30, 2008. This decrease is due to the retirement of $22.7 million in face value of the 5% Convertible Senior Notes since September 30, 2008.

Discontinued operations

In the fourth quarter of 2008 and during the first quarter of 2009, Toreador farmed out or sold all of its working interests in Romania to three different companies and closed its office; thus, we no longer have any operational involvement in Romania. All revenues and expenses associated with the Romanian operation for the three months ended September 30, 2009 and 2008 have been included in discontinued operations.

In February 2009, the Board of Directors authorized management to retain Stellar Energy Advisors, based in London, UK, to manage a process to monetize its wholly owned subsidiary, Toreador Turkey, including the Company's remaining 10% interest in the SASB, in addition to the onshore production, and 2.2 million net acres in exploration licenses that are currently held in Turkey. On September 30, 2009, the Company entered into the Share Purchase Agreement with Tiway, pursuant to which the Company agreed to sell 100% of the outstanding shares of Toreador Turkey to Tiway. The sale of Toreador Turkey was completed on October 7, 2009. All revenues and expenses associated with the Turkish operation for the three months ended September 30, 2009 and 2008 and for the nine months ended September 30, 2009 and 2008 have been included in discontinued operations.

Additionally, on September 30, 2009, the Company entered into the Quota Purchase Agreement with RAG, pursuant to which the Company agreed to sell 100% of its equity interests in Toreador Hungary to RAG. The sale of Toreador Hungary was completed on September 30, 2009. Therefore, all expenses associated with the Hungarian operation for the three months ended September 30, 2009 and 2008 and for the nine months ended September 30, 2009 and 2008 have been included in discontinued operations.

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		Three Months Ended September 30,

		2009			2008
Revenue:
	Oil and natural gas sales	$	1,632		$	8,054
Operating costs and expenses:
	Lease operating expense		381			2,477
	Exploration expense		136			756
	Dry hole costs		1,318			—
	Depreciation, depletion and amortization		52			8,788
	Impairment of oil and natural gas properties		5,425			—
	General and administrative expense		1,720			580
	Loss on sale of properties and other assets		4,171			—

	Total operating costs and expenses		13,203			12,601

	Operating loss		(11,571	)		(4,547	)
Other income (expense)
	Foreign currency exchange gain		1,190			1,608
	Interest and other income		18			261
	Interest expense		(155	)		(1,030	)

Net loss before income taxes			(10,518	)		(3,708	)
Income tax provision			—			19

Loss from discontinued operations		$	(10,518	)	$	(3,727	)

The following tables present production and average unit prices for Turkey:

		For the Three Months Ended September 30,

		2009		2008
Production:
Oil (MBbls):
	Turkey		14		14
Gas (MMcf):
	Turkey		105		471
MBOE:
	Turkey		32		93
Average Price:
Oil ($/Bbl):
	Turkey		58.65		111.33
Gas ($/Mcf):
	Turkey		7.62		12.34
$/BOE:
	Turkey		51.52		79.73

Oil and natural gas sales from discontinued operations for the three months ended September 30, 2009 were $1.6 million, as compared to $8.1 million for the comparable period in 2008. This decrease is

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primarily due to the sale of our 26.75% interest to Petrol Ofisi, which was completed in March 2009 and the $28.21 per BOE decline in oil and natural gas prices since the comparable period in 2008.

For the three months ended September 30, 2009 we recorded dry hole costs of $1.3 million in Turkey, which represents the Company's share of the drilling costs that exceed the carry of the Durusu#1 well, which as drilled in offshore Turkey. Additionally, due to the Company's intention not to proceed with the Hungarian pipeline project, we recorded an impairment of $5.4 million which represents our share of the pipeline cost and the capitalized cost of the previously drilled Kiha 15 well.

The sale of Toreador Hungary resulted in a loss on sale of $4.2 million. This amount is comprised of cash received at closing $5.4 million, less the net book value of assets $12.9 million. plus the reclassification of other comprehensive income from the balance sheet totaling $3.3 million.

Other comprehensive income

The most significant element of comprehensive income, other than net income, is foreign currency translation. For the three months ended September 30, 2009, we had accumulated an unrealized loss of $2 million as compared to an unrealized loss of $7.1 million for the comparable period in 2008. This change is primarily due to the strengthening of the U.S. Dollar compared to the Euro for the three months ended September 30, 2009 versus September 30, 2008.

RESULTS OF OPERATIONS

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

The following tables present production and average unit prices for the geographic segments indicated:

		For the Nine Months Ended September 30

		2009		2008
Production:
Oil (MBbls):
	France		248		278
Average Price:
Oil ($/Bbl):
	France		51.93		105.81

Revenue

Oil sales

Oil sales for the nine months ended September 30, 2009 were $13.1 million, as compared to $29.5 million for the nine months ended September 30, 2008. This decrease is primarily due to the global decrease in oil prices during the nine months ended September 30, 2009, as compared to the comparable period of 2008. This resulted in a reduction of revenue of $13.3 million. Additionally, we had a decrease in oil production of 30 MBbls as a result of wells being shut in for workovers and natural decline, resulting in a decrease in revenue of $3.1 million.

The above table compares both volumes and prices received for oil for the nine months ended September 30, 2009 and 2008. Oil prices are, and, we expect, will continue to be, extremely volatile for the remainder of the fiscal year 2009. The results of our operations are highly dependent upon our oil production and upon the prices received from our oil production, which are dependent on numerous factors beyond our control. Accordingly, significant changes to oil prices, or material changes in our oil

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production, are likely to have a material impact on our financial condition, results of operation, cash flows and revenue.

Costs and expenses

Lease operating

Lease operating expense was $5 million, or $20.16 per BOE produced, for the nine months ended September 30, 2009, as compared to $6.9 million, or $24.65 per BOE produced for the nine months ended September 30, 2008. This decrease is primarily due to a reduction in the cost of services provided by third-party vendors due to current economic conditions, the strengthening of the U. S. Dollar compared to 2008 and the delay in performing several workovers until a study of the best method to use is finalized.

Exploration expense

Exploration expense for the nine months ended September 30, 2009 was $130,000, as compared to $918,000 for the nine months ended September 30, 2008. This decrease is due primarily to elimination of the exploration staff in the Dallas office due to the relocation of our headquarters to Paris.

Depreciation, depletion and amortization

Depreciation, depletion and amortization expense for the nine months ended September 30, 2009 was $4.5 million or $18.15 per BOE produced, as compared to $3.5 million, or $12.55 per BOE produced for the nine months ended September 30, 2008. This increase is primarily due to the lower proved reserves assigned to our French assets at December 31, 2008 due to depressed oil prices and was partially offset by the decline in oil production of 30MBbls for the nine months ended September 30, 2009 as compared to the nine months ended September 30, 2008.

Impairment of oil and gas properties

For the nine months ended September 30, 2009, we did not incur any impairment charges, as compared to $2.3 million for the nine months ended September 30, 2008. The impairment charge is for the undeveloped leasehold costs in Trinidad, which was due to management's decision to exit Trinidad and discontinue our association with our registered agent in the country.

General and administrative expense, not including stock compensation expense, cost incurred due to the resignation of former officers and the costs associated with the relocation of the corporate headquarters from Dallas, Texas to Paris, France, was $6 million for the nine months ended September 30, 2009 compared to $7.2 million for the nine months ended September 30, 2008. This decrease is primarily due to the reduction in staff of the Dallas office in 2009 due to the relocation of our corporate headquarters to Paris, France.

Stock compensation expense

Stock compensation expense was $2.8 for the nine months ended September 30, 2009 compared to $2.3 million for the nine months ended September 30, 2008. This increase is primarily due to the change in the structure of Board compensation, whereby directors receive a greater portion of their compensation in stock rather than cash, and a stock bonus that was granted to foreign office employees. The immediate vesting of grants made to employees in the Dallas office that have been terminated, has been classified as "Cost associated with the Dallas office/relocation of corporate headquarters from Dallas, Texas to Paris, France" and are reflected in this amount.

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Cost incurred due to resignation of former executive officers

The Company and Nigel Lovett, our former President and Chief Executive Officer, entered into a Separation and Mutual Release Agreement (the "Lovett Release") in connection with his resignation from the Company in January 2009. Pursuant to the Lovett Release, Toreador amended certain terms and conditions of Mr. Lovett's 2008 employment agreement (the "2008 Employment Agreement") with Toreador. The terms of the 2008 Employment Agreement, as amended, provide for Toreador to: (i) pay Mr. Lovett all unpaid compensation earned but not paid, (ii) pay Mr. Lovett certain severance payments totaling $720,000 to be paid in 24 equal monthly installments, (iii) issue 90,000 shares of Toreador common stock to Mr. Lovett, and (iv) vest 6,800 shares of Toreador restricted stock held by Mr. Lovett. The cost associated with the Lovett Release totaled $832,000, which was recorded in the first quarter of 2009.

In June 2008, Michael FitzGerald resigned as Executive Vice President—Exploration and Production and Edward Ramirez resigned as Senior Vice President—Exploration and Production. Their Separation and Release Agreements provided for (i) each to receive one year of salary which together resulted in an expense of $600,000, and (ii) for Mr. FitzGerald the immediate vesting of 5,000 shares of restricted stock grants and for Mr. Ramirez the immediate vesting of 7,000 shares of restricted stock grants which together resulted in an expense of $35,000.

In addition in June 2008, three other employees resigned, which collectively resulted in an additional $304,000 of expense.

Cost associated with subsidiary sales

For the nine months ended September 30, 2009, we incurred $765,000 in legal and consulting expenses due to the sale of the Turkish and Hungarian subsidiaries.

Cost associated with the Dallas office/ relocation of corporate headquarters from Dallas, Texas to Paris, France

For the nine months ended September 30, 2009 we had $4.2 million of costs associated with the Dallas office/ relocation of our headquarters to Paris, France. The major components are: 1) salaries and wages associated with Dallas office employees $901,000; 2) severance payments $1.7 million; 3) corporate restructuring expenses $752,000; 4) travel associated with Dallas office employees $309,000; 5) relocation costs $322,000 and 6) Dallas office rent $206,000. For the nine months ended September 30, 2008, we did not have any such relocation costs.

Gain (Loss) on oil and gas derivative contracts

Gain on oil and gas derivative contracts for the nine months ended September 30, 2009 was $7,000, as compared to a loss of $1.8 million for the nine months ended September 30, 2008. The loss in 2008 represents the recognized loss on the commodity derivative contracts with Total Oil Trading. Presented in the table below is a summary of the contracts entered into:

Type	Period		Floor		Ceiling		(Gain) Loss

Collar	January 1 - March 31, 2008	48,000	$	84.75	$	92.75	$	19
Collar	April 1 - June 30, 2008	48,000	$	92.25	$	100.25		2,239
Collar	July 1 - September 30, 2008	48,000	$	91.75	$	99.75		(452	)

							$	1,806

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The gain in 2009 represents the recognized gain on the commodity derivative contracts with Vitol S.A. Presented in the table below is a summary of the contracts entered into:

Type		Period		Barrels			Floor			Ceiling			Gain

Collar		July 1 - September 30, 2009			55,200		$	65.00		$	77.00		$	7

Foreign currency exchange gain (loss)

We recorded a loss on foreign currency exchange of $131,000 for the nine months ended September 30, 2009 compared with a gain of $1 million for the nine months ended September 30, 2008. This decrease is primarily due the stabilization of the Euro in the first nine months of 2009 as compared to the comparable period 2008.

Gain on the early extinguishment of debt

In April 2009, we repurchased $16.7 million principal amount of the Convertible Senior Notes on the open market and through privately negotiated transactions for $12.7 million plus accrued interest and prepaid loan fees of $650,000. This repurchase resulted in a gain of $3.4 million on the early extinguishment of debt which was recorded in the second quarter of 2009. For the nine months ended September 30, 2008, we repurchased $5.5 million principal amount of the Convertible Senior Notes for $4.9 million plus accrued interest of $106,180 and $222,995 of prepaid loan fees that are attributable to the repurchased Convertible Senior Notes. This resulted in a gain on the early extinguishment of debt of $368,225. We intend to continue to buy back a portion of the currently outstanding Convertible Senior Notes in the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors.

Interest and other income

Interest and other income was $726,000 for the nine months ended September 30, 2009 as compared to interest and other income of $598,000 for the nine months ended September 30, 2008. The increase is primarily due to average cash balance being higher for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008, primarily due to our recent dispositions in Turkey and Hungary and related reduction in capital expenditures.

Interest expense, net of interest capitalized

Interest expense was $2.6 million for the nine months ended September 30, 2009, as compared to $3.1 million for the nine months ended September 30, 2008. This decrease is due to the retirement of $22.7 million in face value of the 5% Convertible Senior Notes since September 30, 2008.

Discontinued operations

In the fourth quarter of 2008 and during the first quarter of 2009, Toreador farmed out or sold all of its working interests in Romania to three different companies and closed its office; thus, we no longer have any operational involvement in Romania. All revenues and expenses associated with the Romanian operation for the three months ended September 30, 2009 and 2008 and for the nine months ended September 30, 2009 and 2008 have been included in discontinued operations.

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sale of Toreador Turkey was completed on October 7, 2009. All revenues and expenses associated with the Turkish operation for the three months ended September 30, 2009 and 2008 and for the nine months ended September 30, 2009 and 2008 have been included in discontinued operations.

Additionally, on September 30, 2009, the Company entered into the Quota Purchase Agreement with RAG, pursuant to which the Company agreed to sell 100% of its equity interests in Toreador Hungary to RAG. The sale of Toreador Hungary was completed on September 30, 2009. Therefore, all expenses associated with the Hungarian operation for the three months ended September 30, 2009 and 2008 and for the nine months ended September 30, 2009 and 2008 have been included in discontinued operations.

		Nine Months Ended September 30,

		2009			2008
Revenue:
	Oil and natural gas sales	$	4,545		$	22,062
Operating costs and expenses:
	Lease operating expense		886			6,277
	Exploration expense		868			1,979
	Dry hole costs		1,318			—
	Depreciation, depletion and amortization		157			26,463
	Impairment of oil and natural gas properties		10,725			53,479
	General and administrative expense		3,424			2,045
	Gain on sale of properties and other assets		(1,675	)		—

	Total operating costs and expenses		15,703			90,243

	Operating loss		(11,158	)		(68,181	)
Other income (expense)
	Foreign currency exchange gain		3,822			1,953
	Interest and other income		414			395
	Loss on early extinguishment of debt—revolving credit facility		(4,881	)		—
	Interest expense		(185	)		(3,266	)

Net loss before income taxes			(11,988	)		(69,099	)
Income tax benefit			—			(2,871	)

Loss from discontinued operations		$	(11,988	)	$	(66,228	)

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The following tables present production and average unit prices for Turkey:

		For the Nine Months Ended September 30,

		2009		2008
Production:
Oil (MBbls):
	Turkey		39		42
Gas (MMcf):
	Turkey		301		1,448
MBOE:
	Turkey		89		284
Average Price:
Oil ($/Bbl):
	Turkey		49.79		105.14
Gas ($/Mcf):
	Turkey		8.64		10.75
$/BOE:
	Turkey		50.94		70.54

Oil and natural gas sales from discontinued operations for the nine months ended September 30, 2009 were $4.5 million, as compared to $22.1 million for the nine months ended September 30, 2008. This decrease is primarily due to the sale of our 26.75% interest in the SASB to Petrol Ofisi, which was completed in March 2009, and the $18.6 per BOE decline in oil and natural gas prices since the comparable period in 2008.

For the nine months ended September 30, 2009 we recorded dry hole costs of $1.3 million in Turkey, which represents the Company's share of the drilling costs that exceed the carry of the Durusu#1 well, which was drilled in offshore Turkey. Additionally, for the nine months end September 30, 2009 we recorded an impairment of $10.7 million due to 1) the Company's decision not to proceed with the Kiha pipeline in Hungary, we recorded an impairment of $5.4 million, which represents our share of the pipeline cost and the capitalized cost of the pipeline and the previously drilled Kiha 15 well and 2) we recorded a $5.3 million impairment in Turkey due to the decline in the fair market value of the Company's interest in the South Akcakoca Sub-Basin assets, which was due to a 25% reduction in the posted sales price of natural gas produced in Turkey.

The sale of the Romanian assets resulted in a gain on sale of $5.8 million and the sale of the Hungarian entity resulted in a loss of $4.2 million or a net gain on sale of assets totaling $1.7 million.

Other comprehensive income

The most significant element of comprehensive income, other than net income, is foreign currency translation. For the nine months ended September 30, 2009, we had accumulated an unrealized loss of $4.3 million, after reclassifying $8.6 million to discontinued operations associated with the exiting of Hungary and Romania, as compared to an unrealized income of $2.3 million for the nine months ended September 30, 2008. This is primarily due to the weakening of the U.S. Dollar compared to the Euro in 2009.

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The functional currency of our operations in France is the Euro. The functional currency in Turkey and Hungary is the U.S. Dollar. The exchange rates at September 30, 2009 and 2008 were:

	September 30,

	2009		2008
Euro	$	1.4643	$	1.4303
New Turkish Lira	$	0.6737	$	0.7887
Hungarian Forint	$	0.0054	$	0.0059

Off-balance sheet arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company's market risk during the nine months ended September 30, 2009. For additional information, refer to the market risk disclosure in Item 7A as presented in the Company's 2008 Annual Report on Form 10-K which was initially filed with the SEC on March 16, 2009 and amended on April 16, 2009.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange) that are designed to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of September 30, 2009 were effective.

Changes in Internal Control over Financial Reporting

In the quarter ended September 30, 2009, due to the announced relocation of the headquarters to Paris, France, we eliminated three positions in our accounting and finance department. The responsibility and duties of these individuals were assumed by the remaining personnel. Management believes that the change does not materially affect our system of internal control due to compensating controls that are currently in effect.

Effective for the quarter ended September 30, 2009, the Company has engaged a three-person team of external accountants at Dauge-Fidelio, an independent member of Crowe Horwath International, including one at the partner level, to perform the job functions that were previously being performed by the accounting and finance employees whose positions were eliminated in connection with the relocation of the Company's headquarters from Dallas, Texas to Paris, France. In addition, the Company's former Chief Financial Officer has been retained in an advisory role through March 2010 to assist in the oversight of the Company's financial reporting and ensure a smooth transition of such responsibilities to the Company's newly appointed Chief Financial Officer, effective September 15, 2009.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 11, which is incorporated into this "Item 1. Legal Proceedings" by reference

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously discussed in the Company's annual report on Form 10-K for the year ended December 31, 2008, which was initially filed with the SEC on March 16, 2009, and was amended on April 16, 2009.

ITEM 6. EXHIBITS

	Description	Incorporation by Reference

10.1	Employment Agreement by and between the Company and Craig McKenzie dated August 24, 2009.	Incorporated by reference to Exhibit 10.1 to the Form 8-K filed on August 24, 2009.
10.2	Employment Agreement by and between the Company and Marc Sengès dated September 15, 2009.	Incorporated by reference to Exhibit 10.1 to the Form 8-K filed on September 17, 2009.
10.3	Quoin Purchase Agreement, dated September 30, 2009, between the Company and RAG (Rohöl-Aufsuchungs Aktiengesellschaft).	Incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 6, 2009.
10.4	Share Purchase Agreement dated September 30, 2009 among the Company, Tiway Oil BV and Tiway Oil AS.	Incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 6, 2009.
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed Herewith.
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed Herewith.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed Herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-Q report to be signed on its behalf by the undersigned thereunto duly authorized.


		TOREADOR RESOURCES CORPORATION
November 9, 2009		/s/ CRAIG M. MCKENZIE Craig M. McKenzie President and Chief Executive Officer
November 9, 2009		/s/ MARC SENGÈS Marc Sengès Chief Financial Officer

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TOREADOR RESOURCES CORP Reports

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