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

        The following table summarizes the valuation of our investments and financial instrument assets (liabilities) measured on a recurring basis at fair value by pricing levels:

        The table below summarizes the change in carrying values associated with Level 3 financial instruments:

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 FASB ASC 360 "Property, plant and Equipment", formerly Statement of Financial Accounting Standard No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("Statement 144"). 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 three months ended March 31, 2010 and March 31, 2009, there was no impairment charge for our continuing operations. For the three months ended March 31, 2009, we incurred an impairment charge of $5.3 million, which is included in discontinued operations.

        The impairment charge in Turkey of $5.3 million, as of March 31, 2009, was a result of a decline in the fair market value of the Company's interest in South Akcakoca Sub-Basin asset. The fair market value declined at March 31, 2009 due to a 25% reduction in the posted sales price of natural gas produced in Turkey announced on May 1, 2009.

NOTE 16—SUBSEQUENT EVENTS

        The Company has evaluated subsequent events and transactions through the date the financial statements were issued for possible disclosure or recognition in the financial statements. The Company has determined that there were no events or transactions that required disclosure in the footnotes to the financial statements

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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, 2009, which was filed with the SEC on March 16, 2010. Certain prior-year amounts have been reclassified and adjusted 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 ability to raise necessary capital in the future;



•

our ability to maintain or renew our existing exploration permits or exploitation concessions or obtain new ones;



•

the effect of our indebtedness on our financial health and business strategy;



•

our ability to obtain a strategic partner for our pilot program in the Paris Basin Oil Shale;



•

our ability to execute our business strategy and be profitable;



•

our ability to replace oil reserves;



•

a change in the SEC position on our calculation of proved reserves;



•

the loss of the current purchaser of our oil production;



•

results of our hedging activities;



•

the loss of senior management or key employees;



•

political, legal and economic risks associated with having international operations;



•

disruptions in production and exploration activities in the Paris Basin;



•

currency fluctuations;



•

failure to maintain adequate internal controls;



•

indemnities granted by us in connection with dispositions of our assets;



•

unfavorable results of legal proceedings;



•

assessing and integrating acquisition prospects;



•

declines in prices for crude oil;

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•

our ability to compete in a highly competitive oil and gas industry;



•

our ability to obtain equipment and personnel;



•

extensive regulation, including environmental regulation, to which we are subject;



•

terrorist activities;



•

our success in development, exploitation and exploration activities;



•

reserves estimates turning out to be inaccurate; and



•

differences between the present value and market value of our reserves.

        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, 2009, filed with the SEC on March 16, 2010, 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.

EXECUTIVE OVERVIEW

        We are an independent energy company engaged in the exploration and production of crude oil with interests in developed and undeveloped oil properties in the Paris Basin, France. We are currently focused on the development of our conventional fields and the exploitation of the prospective shale oil play within our Paris Basin acreage position.

        We currently operate solely in the Paris Basin, which covers approximately 170,000 km² of northeastern France, centered 50 to 100 km east and south of Paris. At March 31, 2010, we held interests in approximately 680,000 gross exploration acres. According to Gaffney, Cline & Associates Ltd, an independent petroleum and geological engineering firm ("Gaffney Cline"), as of December 31, 2009, our proved reserves were 5.8 MBbls, our proved plus probable reserves were 9.1 MBbls and our proved plus probable plus possible reserves were 14.3 MBbls. Our production for 2009 averaged approximately 900 bbl/d from two conventional oilfield areas in the Paris Basin—the Neocomian Complex and Charmottes fields. As of March 31, 2010, production from these oil fields represented substantially all of our revenue. We intend to maintain production from these mature assets using suitable enhanced oil recovery techniques. In addition to this production base, we have identified several additional conventional exploration targets. We received well results on the La Garenne, the first of these targets, in January 2010. We are completing our analysis of the results and intend to finalize a development plan in the second quarter of 2010.

        We are also currently focused on exploiting our shale oil acreage in the Paris Basin. Our current priority is to execute a proof of concept program by drilling, by completing and testing at least three pilot wells, subject to approval of drilling by the French government, for which the Company intends to submit an application by the end of May 2010. The Company is in the process of identifying a potential partner to assist with our proof of concept program.

Convertible Notes Exchange

        On February 1, 2010, we consummated the Convertible Notes Exchange. In the Convertible Notes Exchange, in exchange for (a) $22,231,000 principal amount of our outstanding 5.00% Convertible Senior Notes (the "Old Notes") and (b) $9.4 million cash, we issued $31,631,000 aggregate principal amount of our 8.00%/7.00% Convertible Senior Notes (the "New Convertible Senior Notes") and paid accrued and unpaid interest on the Old Notes.

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Public Offering

        On February 12, 2010, we completed a registered underwritten public offering of 3,450,000 shares of common stock, including 450,000 shares of common stock acquired by the underwriters from us to cover over-allotment options. The net proceeds to Toreador from the offering were approximately $26.8 million, after deducting underwriting discounts, commissions and offering expenses. We intend to use the net proceeds, together with cash on hand, to satisfy payment obligations arising from the holders' exercise, if any, of their right on October 1, 2010 to require the Company to repurchase its 5.00% Convertible Senior Notes and for general corporate purposes, which may include working capital, capital expenditures and acquisitions. See "5.00% Convertible Senior Notes Due October 1, 2025" in Note 5 to Notes to Consolidated Financial Statements. As of March 31, 2010, $32.4 million principal aggregate amount of the 5% Convertible Senior Notes was outstanding. Pending such use, we have invested the net proceeds in mutual and money market funds, bank certificates of deposit and/or government securities.

Operations Update

La Garenne Well

        We began drilling on the La Garenne well on November 12, 2009. The well confirmed a five-meter reservoir within a 50-meter oil column in the target Dogger formation. Based on our continued evaluation of the well results, we believe the well confirms a porous and hydrocarbon-bearing reservoir with a localized low-permeability area at the crest of the structure.

        We completed production testing of the well in January 2010, and the results were inconclusive. The well flowed only limited quantities from one of its two horizons in the Dogger. We are completing our analysis of the results and intend to finalize a development plan in the second quarter of 2010. We expect that the vertical well drilled will be used as a water disposal or an injection well in the development of this field.

Strategic Partner Process

        In November 2009, our Board of Directors retained RBC Capital Markets to assist the Board's Strategic Committee in the review of various strategic alternatives. The approach we are principally focused on is identifying a potential partner to assist us, through a farm-out agreement or other means, in exploiting our shale oil acreage in the Paris Basin. Our current priority is to execute a proof of concept program by drilling, by completing and by testing at least three pilot wells, subject to approval of drilling by the French government, for which the Company intends to submit an application by the end of May 2010. The Company is in the process of identifying a potential partner to assist with our proof of concept program.

Strategy

        The primary components of our strategy are:

•

Focus on France.  All of our oil assets are currently located in France, having disposed of our interests in Turkey and Hungary in 2009. We believe we can leverage our substantial acreage position and our experience and industry relationships in France to grow the Company.



•

Capture, develop and accelerate conventional prospects.  We have identified a number of conventional oil prospects, which we intend to evaluate for potential development, beginning with La Garenne.

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•

Target the prospective unconventional oil resource play.  We are currently seeking a strategic partner to assist in our proof of concept program and potential development of our Paris Basin shale oil acreage position.



•

Continue to focus on operational costs.  Since the beginning of 2009, we have improved operational efficiencies, and we intend to reduce general and administrative costs and continue to focus on maintaining efficient operations.



•

Seek and maintain optimal capital structure.  We expect the proceeds from the February 2010 public offering to enable us to reduce our debt, and we intend to maintain a conservative capital structure over time.

Financial Summary

        For the three months ended March 31, 2010:

•

Revenues from continuing operations were $5.5 million.



•

Operating costs from continuing operations were $7.3 million.



•

Loss from discontinued operations, net of income taxes, was $0.6 million.



•

Net loss available to common shares was $7.5 million.



•

Production was 78MBOE

        At March 31, 2010, we had:

•

Cash of $38.2 million.



•

A current ratio of 1.06 to 1.



•

A debt to equity ratio of 3.08 to 1.

LIQUIDITY AND CAPITAL RESOURCES

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

        The Company's liquidity depends on cash flow from operations and existing cash resources. As of March 31, 2010, we had cash of $38.2 million, a current ratio of approximately 1.06 to 1 and a debt to equity ratio of 3.08 to 1. For the three months ended March 31, 2010, we had an operating loss of $1.8 million and capital expenditures of approximately $186,000. The Company does not currently have a credit facility and intends to rely on its cash balance to meet its immediate cash requirements.

        Our cash flow from operations is 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. Oil prices increased approximately 20% since January 1, 2010, and oil prices are, and, we expect, will continue to be, volatile for the remainder of the fiscal year 2010. In order to reduce our exposure to crude oil price fluctuations, we have entered into a collar contract for approximately 15,208 Bbls per month for the months of January 2010 through December 2010 for which the floor price is $68.00 per bbl, and the ceiling price is $81.00 per bbl.

        On February 1, 2010, we consummated the Convertible Notes Exchange. In the Convertible Notes Exchange, in exchange for (a) $22,231,000 principal amount of our outstanding 5.00% Convertible Senior Notes (the "Old Notes") and (b) $9.4 million cash, we issued $31,631,000 aggregate principal amount of our 8.00%/7.00% Convertible Senior Notes (the "New Convertible Senior Notes") and paid

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accrued and unpaid interest on the Old Notes. See—"5.00% Convertible Senior Notes Due October 1, 2025" and—"8.00%/7.00% Senior Convertible Notes Due October 1, 2025" for further details.

        On February 12, 2010, we completed a registered underwritten public offering of 3,450,000 shares of common stock, including 450,000 shares of common stock acquired by the underwriters from us to cover over-allotment options. The net proceeds to Toreador from the offering were approximately $26.8 million, after deducting underwriting discounts, commissions and offering expenses. We intend to use the net proceeds, together with cash on hand, to satisfy payment obligations arising from the holders' exercise, if any, of their right on October 1, 2010 to require the Company to repurchase its 5.00% Convertible Senior Notes and for general corporate purposes, which may include working capital, capital expenditures and acquisitions. See—"5.00% Convertible Senior Notes Due October 1, 2025." As of March 31, 2010, $32.4 million principal aggregate amount of the 5% Convertible Senior Notes was outstanding. Pending such use, we have invested the net proceeds in mutual and money market funds, bank certificates of deposit and/or government securities.

        We currently have no mandatory capital expenditures in 2010; however, we are currently evaluating a development plan for the La Garenne field. In addition, under French law, each of our exploration permits and exploitation concessions require that we commit to expenditures of a certain amount over the period of the applicable permit or concession. Though we consider these amounts discretionary, such expenditures would be required to renew such permits.

        We believe we will have sufficient cash flow from operations and cash on hand to meet all of our 2010 obligations.

5.00% CONVERTIBLE SENIOR NOTES DUE OCTOBER 1, 2025

        On September 27, 2005, we issued $75 million of Convertible Senior Notes due October 1, 2025 (the "5% 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 5% Convertible Senior Notes to cover over-allotments. The over-allotment option was exercised on September 30, 2005. The total principal amount of 5% 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 5% 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 5% 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.

        The 5% 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 5% Convertible Senior Notes, subject to adjustment (equivalent to a conversion price of approximately $42.81 per share). We may redeem the 5% 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 5% 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 5% Convertible Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of 5% Convertible Senior Notes to be redeemed, plus any accrued and unpaid interest, irrespective of the price of our common stock. Holders may convert their 5% 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 5% Convertible Senior Notes for cash in an

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amount equal to 100% of the principal amount of such 5% Convertible Senior Notes, plus any accrued and unpaid interest.

        During 2008 the Company repurchased $6 million, face value, of the 5% Convertible Senior Notes on the open market for $5.3 million. This resulted in a gain on the early extinguishment of debt totaling $458,000. In 2009 the Company repurchased $25.7 million face value of the 5% Convertible Senior Notes on the open market for $21.3 million, resulting in a gain on the early extinguishment of debt of $3.4 million after writing off deferred loan costs of approximately $1 million. On February 1, 2010, Toreador consummated the Convertible Notes Exchange. In the Convertible Notes Exchange, in exchange for (a) $22,231,000 principal amount of our outstanding 5.00% Convertible Senior Notes (the "Old Notes") and (b) $9.4 million cash, we issued $31,631,000 aggregate principal amount of our 8.00%/7.00% Convertible Senior Notes, or the New Convertible Senior Notes, and paid accrued and unpaid interest on the Old Notes.

        As of March 31, 2010, $32.4 million principal aggregate amount of the 5% Convertible Senior Notes was outstanding.

        As the debt instruments exchanged in the Convertible Notes Exchange have substantially different terms, the Company recognized the exchange of the 5% Convertible Senior Notes as extinguishment of debt. As a result, for the three months ended March 31, 2010, the Company recognized a loss of $4.3 million, including write off of loan original fee of $822,000. The New Convertible Senior Notes are recorded at a fair value of $35,065,000 on the date of exchange. The loss on the Convertible Notes Exchange, which was determined using fair market value of the New Convertible Senior Notes, will be amortized to income over the term of the New Convertible Senior Notes. Amortization of $37,000 was recorded for the period ended March 31, 2010.

8.00%/7.00% CONVERTIBLE SENIOR NOTES DUE OCTOBER 1, 2025

        On February 1, 2010, Toreador consummated the Convertible Notes Exchange. In the Convertible Notes Exchange, in exchange for (a) the Old Notes and (b) $9.4 million cash, we issued $31,631,000 aggregate principal amount of our 8.00%/7.00% Convertible Senior Notes (the "New Convertible Senior Notes") and paid accrued and unpaid interest on the Old Notes. We incurred approximately $1.9 million of costs associated with the issuance of the New 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 method (which approximates effective interest method) over the term of the New Convertible Senior Notes.

        The New Convertible Senior Notes are senior unsecured obligations of the Company, ranking equal in right of payment with the Company's 5.00% Convertible Senior Notes and future unsubordinated indebtedness. The New Convertible Senior Notes will mature on October 1, 2025 and pay annual cash interest at 8.00% from February 1, 2010 until January 31, 2011 and at 7.00% per annum thereafter. Interest on the New Convertible Senior Notes will be payable on February 1 and August 1 of each year, beginning on August 1, 2010.

        The New Convertible Senior Notes are convertible prior to February 1, 2011 only if an event of default occurs and is continuing under the terms of the indenture, upon a change of control (as defined in the indenture) and to the extent the Company elects to redeem the New Convertible Senior Notes in a Provisional Redemption (as defined below). The New Convertible Senior Notes are convertible at any time on or after February 1, 2011 and before the close of business on October 1, 2025.

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        The New Convertible Senior Notes are convertible into shares of our common stock at an initial conversion rate of 72.9927 shares of common stock per $1,000 principal amount of New Convertible Senior Notes (which is equivalent to an initial conversion price of $13.70 per share), subject to adjustment upon certain events. Under the terms of the indenture governing the New Convertible Senior Notes, if on or before October 1, 2010, we sold shares of our common stock in an equity offering or an equity-linked offering (other than for compensation), for cash consideration per share such that 120% of the issuance price was less than the conversion price of the New Convertible Senior Notes then in effect, the conversion price was to be reduced to an amount equal to 120% of such offering price. As a result of our February 2010 public offering, the conversion rate of the New Convertible Senior Notes adjusted to 98.0392 shares of common stock per $1,000 principal amount of New Convertible Senior Notes (which is equivalent to a conversion price of approximately $10.20 per share). Pursuant to the indenture, the conversion price of the New Convertible Senior Notes will not be further adjusted under such provision because the proceeds from the public offering were in excess of $20 million.

        The New Convertible Senior Notes may be redeemed in whole or in part at the Company's option prior to October 1, 2013, in cash at a redemption price equal to one hundred percent (100%) of the principal amount of the New Convertible Senior Notes redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a make-whole payment, if the closing sale price of the Company's common stock has exceeded 200% of the conversion price then in effect for at least twenty (20) trading days in any consecutive thirty (30)-trading day period ending on the trading day prior to the date of mailing of the relevant notice of redemption (a "Provisional Redemption"). The New Convertible Senior Notes may be redeemed in whole or in part at the Company's option on or after October 1, 2013 for cash at a redemption price equal to 100% of the principal amount of the New Convertible Senior Notes redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date. In addition, upon the occurrence of certain fundamental changes, and on each of October 1, 2013, October 1, 2015 and October 1, 2020, a holder may require the Company to repurchase all or a portion of the New Convertible Senior Notes in cash for 100% of the principal amount of the New Convertible Senior Notes to be purchased, plus any accrued and unpaid interest to, but excluding, the purchase date.

        Pursuant to the indenture, the Company and its subsidiaries may not incur debt other than Permitted Indebtedness. "Permitted Indebtedness" includes (i) the New Convertible Senior Notes; (ii) the 5.00% Convertible Senior Notes or any indebtedness of the Company that serves to refund or refinance the 5.00% Convertible Senior Notes ("Refinancing Debt"), so long as the principal amount of the Refinancing Debt does not exceed the outstanding principal amount of the 5.00% Convertible Senior Notes; (iii) indebtedness incurred by the Company or its subsidiaries not to exceed the sum of (i) the product of (x) $7.00 and (y) the number of barrels of proved plus probable reserves and (ii) cash equivalents less the aggregate principal amount of the New Convertible Senior Notes outstanding less the aggregate principal amount of the 5.00% Convertible Senior Notes less any Refinancing Debt; (iv) indebtedness that is nonrecourse to the Company or any of its subsidiaries used to finance projects or acquisitions, joint ventures or partnerships, including acquired indebtedness ("Nonrecourse Debt"); and (v) certain other customary categories of permitted debt. In addition, the Company may not permit its total consolidated net debt as of any date to exceed the product of (x) $7.00 and (y) the number of barrels of proved plus probable reserves other than for Nonrecourse Debt. The proved plus probable reserves underlying any Nonrecourse Debt for which debt has been incurred as permitted debt pursuant to clause (iv) above will be excluded from the proved plus probable reserves calculation for the purposes of the above debt covenants.

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Dividends

        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.

Contractual Obligations

        The following table sets forth our contractual obligations in thousands at March 31, 2010 for the periods shown:

        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 our Annual Report on Form 10-K for the year ended December 31, 2009. 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

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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 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 oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward recoverable in future years from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. Proved developed reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well and through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. 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 directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances and (ii) to other undrilled locations if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time.

        Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates. Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir. Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.

        Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic

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methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates. Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project. Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.

        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, 2009, we had an upward reserve revision of 18.11% in total proved reserves. This increase can be correlated to a better long-term performance of our main producing asset, the Neocomian Complex, and a higher oil price. The reserves at December 31, 2009 were priced at $56.99 per Bbl, as compared to $34.29 at December 31, 2008.

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 reserve estimates 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.

        We recorded no impairment in the first quarter of 2010.

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

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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 accounting for future abandonment costs changed on January 1, 2003, with the adoption of FASB ASC 410 "Asset Retirement and Environmental Obligations". ASC 410 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 be 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. In 2005, two separate incidents occurred offshore Turkey in the Black Sea, which resulted in the sinking of the Fallen Structures and the loss of three natural gas wells. We have not been requested, or ordered by any governmental or regulatory body, to remove the Fallen Structures. Therefore, we believe it is unlikely that we will receive such a request or order, and no liability has been recorded.

        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, 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 derivatives instruments such as futures and swaps for purposes of hedging our exposure to fluctuations in the price of crude oil sales. In accordance with FASB ASC 815, "Derivatives 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 as an asset or a liability 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 France is the Euro. 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.

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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 present the operations of Turkey, Hungary and Romania as discontinued operations and are discussed under the heading "Discontinued Operations."

COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

Revenue

Oil sales

        Oil sales for the three months ended March 31, 2010 were $5.5 million, as compared to $3.4 million for the three months ended March 31, 2009. This increase is primarily due to the global increase in oil prices during the last nine months of 2009 and during the first quarter of 2010. This price increase resulted in an increase in revenue of $2.4 million, which offset the decrease in oil production of 6,000 Bbls as a result of natural decline of our oil producing fields.

        The above table compares both volumes and prices received for oil for the three months ended March 31, 2010 and 2009. Oil prices are, and, we expect, will continue to be, extremely volatile. 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.

Costs and expenses

Lease operating

        Lease operating expense was $1.2 million, or $15.38 per BOE produced for the three months ended March 31, 2010, as compared to $1.8 million, or $21.42 per BOE produced, for the three months ended March 31, 2009. This decrease is primarily due to the decrease in maintenance and work over cost as well as a decrease in overhead charges.

Exploration expense

        Exploration expense for the three months ended March 31, 2010 was $18,000, as compared to $76,000 for the three months ended March 31, 2009.The decrease is primarily due to the elimination of the exploration staff in the Dallas office following the relocation of our headquarters to Paris, France.

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Depreciation, depletion and amortization

        Depreciation, depletion and amortization expense for the three months ended March 31, 2010 was $1.1 million or $14.10 per BOE produced, as compared to $1.6 million, or $19.05 per BOE produced for the three months ended March 31, 2009. This decrease is primarily due to a decrease in proved reserves assigned to our French assets at December 31, 2009.

General and administrative before stock compensation

        Excluding stock compensation expense, the overall general and administrative expense for the first quarter of 2010 totaled $3.9 million, as compared to $4.7 million for the comparable period in 2009. This decrease is primarily due to (i) $1.7 million related to the relocation of our headquarters and (ii) $832,000 of costs incurred in connection with the resignation of our former President and Chief Executive Officer in quarter ended March 31, 2009. The decrease was offset by an increase in legal, accounting and professional fees (in part due to additional expenses associated with financing activities and the partnership process for the Paris Basin oil shale) and an increase in general expenses associated with operations in France (of which $1.3 million is attributable to salaries and social benefits and $0.3 million is attributable to technical studies) incurred in the three months ended March 31, 2010.

Stock compensation expense

        Stock compensation expense was $1.1 million for the three months ended March 31, 2010 compared with $292,000 for the three months ended March 31, 2009. This increase is primarily due to additional stock grants during three months ended March 31, 2010 to employees and members of our board of directors and the higher price of the Company's shares on the day of the grant compared to the first quarter of 2009.

Gain on oil and gas derivative contracts

        We recorded an unrealized gain on oil and gas derivative contracts for the three months ended March 31, 2010 of $31,000. We had no oil derivative contract for the same period in 2009. Presented in the table below is a summary of the contracts entered into for 2010:

Foreign currency exchange gain (loss)

        We recorded a gain on foreign currency exchange gain of $205,000 for the three months ended March 31, 2010 compared with a loss of $51,000 for the three months ended March 31, 2009. This increase is primarily due to the fluctuation in currency exchange rate between the U.S. dollar and the Euro over the period.

Interest and other income

        Interest and other income was $80,000 for the three months ended March 31, 2010 as compared to interest and other income of $209,000 for the three months ended March 31, 2009. Prior to the receipt in February of the proceeds from the public equity offering and Convertible Notes Exchange our average cash balance was less than our average cash balance for the three months ended March 31, 2009. In addition, the applicable interest rate was lower in the first quarter of 2010 than the applicable interest rate in the first quarter of 2009.

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Interest and other expense, net of interest capitalization

        Interest expense was $784,000 for the three months ended March 31, 2010 as compared to $1.1 million for the three months ended March 31, 2009. The decrease is primarily due to the repurchase of a portion of our 5% Convertible Senior Notes during the fourth quarter of 2009 and repayment of the International Finance Corporation secured revolving facilities loan during the three months period ended March 31, 2009.

Loss on early extinguishment of debt

        For the three months ended March 31, 2010, the Company accounted for the exchange of a portion of its 5% Convertible Senior Notes as a debt extinguishment and recognized a loss of $4.3 million including write off of loan original fee of $822,000.

Income tax provision (benefit)

        As of March 31, 2010, our French operations recorded a $417,000 tax provision, and the U.S. operations recorded a tax benefit of $87,000, which resulted in a consolidated tax provision of $330,000, compared to a consolidated tax benefit of $78,000 recognized for the same period in 2009.

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 gain of $5.8 million, which was recorded in the first quarter of 2009.

        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 assignment 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 on September 1, 2009. There was no gain or loss resulting from this sale.

        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 ("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 $10.5 million to be paid at closing, (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 which resulted in a gain of $1.8 million.

        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 $5.4 million (€ 3.7 million) paid at closing, (2) $435,000 (€ 300,000), which was held back subject to a post-closing adjustment and was paid to us on November 5, 2009 and (3) a contingent payment of $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 loss of $4.1 million.

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        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:

        We had no oil and natural gas sales and operating cost from discontinued operations for the three months ended March 31, 2010 due to the sale of all our discontinued operations in 2009.

        We recorded a loss of $500,000 as a result of the payment made to Scowcroft under the Settlement Agreement on April 30, 2010. We additionally recorded an expense of $80,000 due to the payment of royalties to Hunnisett and Baker in connection with the Netherby Agreement.

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

Other comprehensive income

        The most significant element of comprehensive income, other than net income, is foreign currency translation. For the three months ended March 31, 2010, we had accumulated an unrealized loss of $4.7 million as compared to an unrealized income of $6.1 million for the comparable period in 2009 due to the stabilization of the U.S. Dollar compared to the Euro.

        The functional currency of our operations in France is the Euro. The functional currency in Turkey and Hungary was the U.S. Dollar. The exchange rates at March 31, 2009 were:

Off-balance sheet arrangements

        We do not have any 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 three months ended March 31, 2010. For additional information, refer to the market risk disclosure in Item 7A as presented in the Company's Annual Report on Form 10-K, for the year ended December 31, 2009, which was filed with the SEC on March 16, 2010.

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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 Act) 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 March 31, 2010 were effective.

Changes in Internal Control over Financial Reporting

        As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2009, which was filed with the SEC on March 16, 2010, during the evaluation of our disclosure controls and procedures conducted as of December 31, 2009, we identified the following material weakness in our internal control over financial reporting:

•

Our accounting and financial reporting procedures were not sufficiently designed to ensure consistent and complete application of our accounting policies and to prepare financial statements in accordance with accounting principles generally accepted in the United States. This includes the lack of a sufficient review of sensitive calculations, reconciliations and critical spreadsheets by personnel in key financial reporting positions..

        As a result, our Chief Executive Officer and Chief Financial Officer concluded that our internal control over financial reporting was not effective as of December 31, 2009. As a result, the Company has reviewed its internal procedures, and our Finance Department with management, including the Chief Financial Officer, has strengthened its control and review of sensitive calculations, reconciliations and critical spreadsheets. Since then a part-time employee in the Finance Department has been replaced by a full-time employee to reinforce that team. In addition, two senior partners at the external accounting consulting firm we engage are now directly participating in our overall financial reporting and internal review process, and a U.S.-based partner of the same firm is now directly and actively overseeing the U.S. GAAP conformity of our main consolidations entries. Management does not believe it is cost effective at this time to hire additional staff and intends to continue to rely on the assistance of the external accounting consulting firm to prepare selected portions of the Company's financial statements with the increased level of review described above; however, management intends to review this position on a regular basis to take into consideration the future development of the group.

PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

        See Note 11 to Notes to Consolidated Financial Statements included in this filing, 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, 2009, which was filed with the SEC on March 16, 2010.

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ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

        On February 1, 2010, we issued the New Convertible Senior Notes pursuant to an exemption from registration under the Securities Act; the issuance was reported on a Current Report on Form 8-K filed with the SEC on February 3, 2010. See "Liquidity and Capital Resources—5.00% Convertible Senior Notes Due October 1, 2025" for a discussion of the Convertible Notes Exchange.

        For the three months ended March 31, 2010, we did not repurchase any shares of our common stock. See "Liquidity and Capital Resources—5.00% Convertible Senior Notes Due October 1, 2025" for a discussion of the Convertible Notes Exchange.

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ITEM 6.    EXHIBITS

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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.

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