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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 10-Q

ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended: March 31, 2010o

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(State or other jurisdiction
of incorporation)

75-0991164(I.R.S. Employer
Identification Number)


c/o Toreador Holding SAS
9 rue Scribe
75009 Paris, France(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 May 3, 2010, there were 24,941,155 shares of common stock, par value $.15625 per share, outstanding.



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Table of Contents

TOREADOR RESOURCES CORPORATION

TABLE OF CONTENTS



PagePART I. FINANCIAL INFORMATIONItem 1.

Financial Statements (unaudited)Consolidated Balance SheetsMarch 31, 2010 and December 31, 2009


1Consolidated Statements of Operationsfor the three months ended March 31, 2010 and
2009


2Consolidated Statements of Changes in Stockholder's Equityfor the three months ended March 31,
2010


3Consolidated Statements of Cash Flowsfor the three months ended March 31, 2010 and
2009


4Notes to Consolidated Financial Statements


5Item 2.

Management's Discussion and Analysis of Financial Condition and
Results of Operations


22Item 3.

Quantitative and Qualitative Disclosures About Market
Risk


37Item 4.

Controls and Procedures


38PART II. OTHER INFORMATIONItem 1.

Legal Proceedings


38Item 1A.

Risk Factors


38Item 2.

Unregistered sales of equity securities and use of
proceeds


39Item 6.

Exhibits


40SIGNATURES


41


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Table of Contents



PART I. FINANCIAL INFORMATION

TOREADOR RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS

March 31,
2010

December 31,
2009(Unaudited)(In thousands, except
share and per share data)ASSETSCurrent assets:Cash and cash equivalents

$
38,155

$
8,712Accounts receivable


2,855


3,126Income tax receivable


599


245Other


2,211


3,593Total current assets


43,820


15,676Oil and natural gas properties, net, using successful efforts method of accounting


69,285


74,261Investments


200


200Goodwill


3,717


3,973Other assets


3,316


2,685$
120,338

$
97,155LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities

$
7,905

$
12,491Deferred lease payable


109


107Derivatives


855


886Current portion of long-term debt


32,385


32,385Income tax payable


187


Total current liabilities


41,441


45,869Long-term accrued liabilities


360


385Deferred lease payable


414


442Asset retirement obligations


6,406


6,733Deferred income tax liabilities


14,787


15,358Convertible senior notes


35,028


22,231Total liabilities


98,436


91,018Commitments and contingenciesStockholders' equity:Common stock, $0.15625 par value, 30,000,000 shares authorized; 25,668,126 and 22,106,955 issued and 24,947,099 and 21,385,928
outstanding


4,011


3,454Additional paid-in capital


198,288


170,895Accumulated deficit


(184,064
)

(176,578
)Accumulated other comprehensive income


6,201


10,900Treasury stock at cost, 721,027 shares


(2,534
)

(2,534
)Total stockholders' equity


21,902


6,137$
120,338

$
97,155


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

1

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TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended
March 31,2010

2009(Unaudited)(In thousands, except
per share data)Oil and natural gas sales

$
5,511

$
3,387Operating costs and expenses:Lease operating


1,240


1,788Exploration expense


18


76Depreciation, depletion and amortization


1,098


1,604General and administrative


5,005


5,003Gain on oil and gas derivative contracts


(31
)

Total operating costs and expenses


7,330


8,471Operating loss


(1,819
)

(5,084
)Other (expense) income:Foreign currency exchange gain (loss)


205


(51
)Loss on early extinguishment of debt


(4,256
)

Interest and other income


80


209Interest expense, net of interest capitalized


(784
)

(1,075
)Total other income expense


(4,755
)

(917
)Loss before taxes


(6,574
)

(6,001
)Income tax provision (benefit)


330


(78
)Loss from continuing operations, net of income taxes


(6,904
)

(5,923
)Loss from discontinued operations, net of income taxes


(575
)

(4,953
)Loss available to common shares

$
(7,479
)
$
(10,876
)Basic loss available to common shares per share:From continuing operations, net of income taxes

$
(0.30
)
$
(0.29
)From discontinued operations, net of income taxes


(0.02
)

(0.25
)$
(0.32
)
$
(0.54
)Diluted loss available to common shares per share:From continuing operations, net of income taxes

$
(0.30
)
$
(0.29
)From discontinued operations, net of income taxes


(0.02
)

(0.25
)$
(0.32
)
$
(0.54
)Weighted average shares outstanding:Basic


23,002


20,123Diluted


23,002


20,123


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

2

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TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Common
Stock
(Shares)

Common
Stock
($)

Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (loss)

Treasury
Stock
(Shares)

Treasury
Stock
($)

Total
Stockholders'
EquityBalance at December 31, 2009


22,107


3,454


170,895


(176,578
)

10,900


(721,027
)

(2,534
)

6,137Exercise of stock options


5





15














15Return of stock options exercised





1

















1Issuance of restricted stock


106


17


(17
)













Issuance of common stock


3,450


539


28,786














29,325Amortization of deferred stock compensation








1,129














1,129Net loss











(7,479
)










(7,479
)Foreign currency translation adjustment














(4,699
)







(4,699
)Tax effect of restricted stock








(87
)













(87
)Payment of equity issuance costs








(2,489
)













(2,489
)Other








56


(7
)










49Balance at March 31, 2010


25,668

$
4,011

$
198,288

$
(184,064
)
$
6,201


(721,027
)
$
(2,534
)
$
21,902


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

3

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Table of Contents



TOREADOR RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months Ended
March 30,2010

2009(Unaudited)(In thousands)Cash flows from operating activities:Net loss

$
(7,479
)
$
(10,876
)Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation, depletion and amortization


1,098


1,656Stock based compensation


1,129


549Deferred income taxes


(571
)

(641
)Accretion expense


57


Amortization of deferred debt issuance costs


49


936Impairment on oil and natural gas properties in Turkey





5,300Unrealized gain on oil and gas derivatives


(31
)

Gain on sale of properties and other assets in Hungary and Romania





(5,846
)Loss on early extinguishment of debtconvertible notes


4,256


Loss on early extinguishment of debtsecured revolving facility





4,881Decrease (increase) in accounts receivable


271


(2,473
)Increase in income taxes receivable


(354
)

Decrease (increase) in other current assets


1,382


(1,517
)(increase) decrease in other assets


435


95Decrease in accounts payable and accrued liabilities


(4,586
)

(3,855
)Decrease in long-term accrued liabilities


(24
)Decrease in deferred lease payable


(26
)

Increase (decrease) in income taxes payable


187


(774
)Net cash provided by (used in) operating activities


(4,207
)

(12,565
)Cash flows from investing activities:Expenditures for property and equipment


(186
)

(529
)Restricted cash





2,098Proceeds from sale of oil and gas properties





50,000Net cash provided by (used in) investing activities


(186
)

51,569Cash flows from financing activities:Repayment of long-term debt





(36,372
)Repayment of convertible notes


(22,231
)

Issuance of convertible notes


31,631


Deferred debt issuance costs


(1,936
)

Proceeds from issuance of common stock, net of equity issuance costs of $2,489 and $82


26,836


(82
)Proceeds from exercise of stock options


15


Net cash provided by (used in) financing activities


34,315


(36,454
)Net increase in cash and cash equivalents


29,922


2,550Effects of foreign currency translation on cash and cash equivalents


(479
)

1,665Cash and cash equivalents, beginning of period

$
8,712

$
19,457Cash and cash equivalents, end of period

$
38,155

$
23,672Supplemental disclosures:Cash paid during the period for interest, net of interest capitalized

$
371

$
137Cash paid during the period for income taxes

$
4

$
581


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

4

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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, 2009, which was filed with the SEC on March 16, 2010. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year.

We
are a Delaware corporation that was incorporated in 1951. Our common stock is traded on the NASDAQ Global Market under the trading symbol "TRGL." Our offices in the United States are
located at 13760 Noel Road, Suite 1100, Dallas, TX, 75240-1383 (telephone number: (214) 559-3933). Our principal executive offices are located at c/o Toreador
Holding SAS, 9 rue Scribe, 75009 Paris, France (telephone number: +33 1 47 03 34 24). Our website address is www.toreador.net.

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

Recent Developments

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.

Convertible Notes Exchange

On February 1, 2010, Toreador consummated an exchange transaction, or 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, or 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.

5

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 1BASIS OF PRESENTATION (Continued)

New Accounting Pronouncements

On January 6, 2010, the FASB issued ASU 2010-03, which aligns the FASB's oil and gas reserve estimation and
disclosure requirements with the requirements in the SEC's Final Rule.

We
adopted the Final Reporting Rule and ASU 2010-03 effective December 31, 2009 as a change in accounting principle that is inseparable from a change in accounting
estimate. Such a change is accounted for prospectively under the authoritative accounting guidance. Comparative disclosures applying the new rules for periods before the adoption of ASU
2010-03 and the Final Reporting Rule are not required.

Our
adoption of ASU 2010-03 and the Final Rule on December 31, 2009 impacted our financial statements and other disclosures in our Annual Report on
Form 10-K for the year ended December 31, 2009, as follows:



In
January 2010, the FASB issued guidance that clarifies and requires new disclosures about fair value measurements. The clarifications and requirement to disclose the amounts and
reasons for significant transfers between Level 1 and Level 2, as well as significant transfers in and out of Level 3 of the fair value hierarchy, were adopted by the Company in
the first quarter of 2010. The new guidance also requires that purchases, sales, issuances, and settlements be presented gross in the Level 3 reconciliation and that requirement is effective
for fiscal years beginning after December 15, 2010 and for interim periods within those years, with early adoption permitted. Adoption of the guidance which only amends the disclosures
requirments did not have significant impact our financial statements.

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, accounts receivable, and our hedging and derivative financial
instruments. We place our cash with high-credit quality financial institutions. We sell oil to one customer, Total. Substantially all of our accounts receivable are due from the purchaser
of oil production. We place our hedging and derivative financial instruments with financial institutions and other firms that we believe have high credit ratings.

6

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 2CONCENTRATION OF CREDIT RISK AND ACCOUNTS RECEIVABLE (Continued)

We
periodically review the collectability of accounts receivable and record an allowance for doubtful accounts on those amounts 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 with the exception of the current allowance.

Accounts
receivable consisted of the following:

March 31,
2010

December 31,
2009Accrued oil sales receivables

$
2,594

$
2,072Recoverable VAT


92


778Other accounts receivable


169


276$
2,855

$
3,126


7

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Table of Contents

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
March 31,2010

2009Basic earnings (loss) per share:Numerator:Loss from continuing operations, net of income tax

$
(6,904
)
$
(5,923
)Loss from discontinued operations, net of income tax


(575
)

(4,953
)Loss available to common shareholders

$
(7,479
)
$
(10,876
)Denominator:Weighted average common shares outstanding


23,002


20,123Basic loss available to common shareholders per share from:Continuing operations

$
(0.30
)
$
(0.29
)Discontinued operations


(0.02
)

(0.25
)$
(0.32
)
$
(0.54
)Diluted loss per share:Numerator:Loss from continuing operations, net of income tax

$
(6,904
)
$
(5,923
)Loss from discontinued operations, net of income tax


(575
)

(4,953
)Loss available to common shareholders

$
(7,479
)
$
(10,876
)Denominator:Weighted average common shares outstanding


23,002


20,123Conversion of 5.0% notes payable



(1)


(1)Diluted shares outstanding


23,002


20,123Diluted loss available to common shareholders per share from:Continuing operations

$
(0.30
)
$
(0.29
)Discontinued operations


(0.02
)

(0.25
)$
(0.32
)
$
(0.54
)


(1)Conversion
of the 5% Convertible Senior Notes and/or the New Convertible Senior Notes would be anti-dilutive therefore, there are no dilutive
shares.


8

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)




NOTE 4COMPREHENSIVE INCOME (LOSS)

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

Three Months Ended
March 31,2010

2009Net loss

$
(7,479
)
$
(10,876
)Foreign currency translation adjustment


(4,699
)

(6,063
)Comprehensive loss

$
(12,178
)
$
(16,939
)


NOTE 5LONG-TERM DEBT

Long-term debt consisted of the following:

March 31,
2010

December 31,
2009Convertible senior notes

$
67,450

$
54,616Less: accumulated accretion on fair value


37


Less: current portion


32,385


32,385$
35,028

$
22,231


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 when the projected total borrowing base amount exceeds $50 million. The $25 million facility was funded on March 2, 2007. The loan and guarantee
agreement also provided for an unsecured $10 million facility which was 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 March 31, 2009 which was recorded in discontinued operations.

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

9

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TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

NOTE 5LONG-TERM DEBT (Continued)

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 (which approximates effective interest 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 its 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
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. 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 an exchange transaction (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 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.

10

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5LONG-TERM DEBT (Continued)

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 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.

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

11

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5LONG-TERM DEBT (Continued)

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.

NOTE 6ASSET RETIREMENT OBLIGATIONS

We account for our asset retirement obligations in accordance with FASB ASC 410, "Asset Retirement and Environmental 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 a cost by increasing the carrying amount of the
related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, 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 during the three months ended March 31, 2010 and for the year ended December 31, 2009:

Three months ended
March 31, 2010

Year ended
December 31, 2009(Unaudited)Asset retirement obligation at beginning of period

$
6,733

$
6,037Asset retirement accretion expense


93


507Foreign currency exchange gain (loss)


(420
)

189Asset retirement obligation at end of period

$
6,406

$
6,733


12

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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. We
currently have continuing operations in the United States and France.

The
following tables provide the geographic operating segment data required by FASB ASC 280 "Segment Reporting" formerly Statement of Financial Accounting Standards No. 131,
"Disclosure about Segments of an Enterprise and Related Information".

Three Months Ended
March 31, 2010United States

France

TotalRevenues

$
3

$
5,508

$
5,511Costs and expenses


2,906


4,424


7,330Operating income (loss)

$
(2,903
)
$
1,084

$
(1,819
)




Three Months Ended
March 31, 2009United States

France

TotalRevenues

$
79

$
3,308

$
3,387Costs and expenses


4,807


3,664


8,471Operating income (loss)

$
(4,728
)
$
(356
)
$
(5,084
)




Total Assets(1)United States

FranceContinuing Operations

TotalMarch 31, 2010

$
74,015

$
93,153

$
167,168December 31, 2009

$
42,996

$
100,989

$
143,985


(1)Each
segment's total assets do not reflect the effect of intersegment eliminations of $46,830 for the periods ending March 31, 2010 and
December 31, 2009.


NOTE 8INCOME TAXES

At March 31, 2010, we recorded a $187,000 income tax payable as we expect to owe income tax within the next 12 months. For the three months ended March 31, 2010 and
2009 we paid income taxes of approximately $4,000 and $581,000, respectively, related to French taxable income. 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.

We
have adopted ASC 740 "Income Taxes", formerly FIN No. 48, "Accounting for Uncertainty in Income Taxes", on January 1, 2007. 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. During the three months ended
March 31, 2010, the Company recognized $0 in potential interest and penalties associated with uncertain tax

13

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8INCOME TAXES (Continued)

positions.
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.

NOTE 9CAPITAL

For the three months ended March 31, 2010, the Company issued 106,171 shares of stock to employees and directors, of which 39,431 shares were immediately vested in accordance with
the terms of the grants and 5,000 stock options were exercised under the terms of the option agreements. Forfeitures for the three months ended March 31, 2010 were 122,884 shares of restricted
stock and 179,500 stock options.

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. 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.

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 March 31, 2010 and 2009 was $0 and
$0.1 million, 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
Oil ("Tiway") in October 2009, the Company 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, we entered into an agreement (the "Netherby Agreement") with Phillip Hunnisett and Roy Barker ("Hunnisett and Barker"), pursuant to which Hunnisett and Barker
agreed to post the collateral required by the Turkish government for Madison Oil Turkey Inc. (a Liberian company later reincorporated in the Cayman Islands as Toreador Turkey Limited) to retain
its 36.75%

14

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11COMMITMENTS AND CONTINGENCIES (Continued)

interest
in relation to eight offshore exploration SASB licenses in exchange for a 1.5% gross overriding royalty interest (the "Overriding Royalty") on the net value to Madison Oil Turkey of all
future production, if any, deriving from Madison's interest in such SASB licenses. Since March 2009, we have corresponded with Hunnisett and Barker regarding a dispute over the compensation payable by
us to Hunnisett and Barker under the Netherby Agreement as a result of Toreador Turkey's sale of a 26.75% interest in the SASB licenses to Petrol Ofisi in March 2009 (the "Netherby Payment Amount").
Hunnisett and Barker have contended that the Netherby Payment Amount could be up to $10.4 million; however, we do not believe that Hunnisett and Barker are entitled to such amount. There has
been subsequent correspondence regarding a dispute as to whether an agreement between the parties had been reached regarding the Netherby Payment Amount; Hunnisett and Barker's contention is that such
agreed Netherby Payment Amount was $7.2 million. We do not believe that any such agreement was reached, and we do not believe that Hunnisett and Barker are entitled to such amount. We intend to
vigorously defend ourselves against any claim for payment of an amount in excess of the amount to which we believe that Hunnisett and Barker are entitled. We have since completed the sale of Toreador
Turkey Ltd., including with it Toreador Turkey's remaining 10% interest in the SASB license, to Tiway. In connection with the sales referred to above, we agreed to indemnify Petrol Ofisi and
Tiway against and in respect of any and all claims, liabilities, and losses arising from the Overriding Royalty. As of March 31, 2010, we had accrued approximately $870,000 as a contingent
liability for these claims, with the expense included in discontinued operations.

On
June 17, 2009, The Scowcroft Group, Inc. ("Scowcroft") filed a complaint in the U.S. District Court for the District of Columbia against us. The complaint alleged that
we breached a contract (the "Scowcroft Contract") between Scowcroft and us relating to the sale of our interests in the SASB and that Scowcroft was entitled to a success fee thereunder as a result of
the sale of our interests in the SASB to Petrol Ofisi in March 2009. The complaint also alleged unjust enrichment/quantum meruit and fraud. Scowcroft sought damages in the amount of $2 million
plus interest, costs and expenses. On April 30, 2010, Toreador and Scowcroft executed a settlement agreement (the "Settlement Agreement"), pursuant to which Toreador agreed to pay Scowcroft
$495,000 and, subject to the receipt of such payment, Scowcroft agreed to take actions to dismiss the suit and the parties agreed to a mutual release with respect to claims relating to the Scowcroft
Contract. On April 30, 2010, Toreador made the settlement payment and the parties filed a stipulation of dismissal of the action. As of March 31, 2010, $495,000 is accrued as a liability
for this claim with the expense included in discontinued operations.

On
January 25, 2010, we received a claim notice from Tiway under the Share Purchase Agreement, dated September 30, 2009, among us, Tiway Oil BV and Tiway relating to
the sale of Toreador Turkey Ltd. in respect of a third-party claim asserted by Petrol Ofisi against Toreador Turkey Ltd. in the amount of TRY 7.6 million ($5.1 million),
for which Tiway alleges we are liable for an estimated TRY 2.1 million ($1.4 million). No formal legal evaluation can be made at this time as to the extent of the Company's liability, if
any. A hearing on this matter has been scheduled for May 18, 2010.

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.

15

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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 were 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 US$5.4 million (€ 3.7 million) paid at closing, (2) US$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
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 loss of $4.1 million.

16

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12DISCONTINUED OPERATIONS (Continued)

The
results of operations of assets in the United States, 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
March 31,2010

2009Revenue:Oil and natural gas sales

$


$
1,362Operating costs and expenses:Lease operating expense





266Exploration expense





586Depreciation, depletion and amortization





52Impairment of oil and natural gas properties





5,300General and administrative expense


(495
)

792Gain on sale of properties and other assets in Romania





(5,846
)Total operating costs and expenses


(495
)

1,150Operating (loss) income


(495
)

212Other income (expense)Foreign currency exchange gain





(285
)Interest and other income





141Loss on early extinguishment of debtrevolving credit facility





(4,881
)Interest expense





(140
)Other expense


(80
)

Net loss before income taxes


(575
)

(4,953
)Income tax benefit





Loss from discontinued operations

$
(575
)
$
(4,953
)


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. In December 2009, we
entered into futures and swap contracts for approximately 15,208 Bbls per month for the months of January 2010 through December 2010. This resulted in a net unrealized derivative fair value gain of
$31,000 at March 31, 2010. Presented in the table below is a summary of the contracts entered into for 2010:

Type

Period

Barrels

Floor

Ceiling

Unrealized Gain for the
three months ended
March 31, 2010Collar

January 1, 2010 - December 31, 2010


182,500

$
68.00

$
81.00

$
31


17

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 March 31, 2010 and December 31, 2009, 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
March 31, 2010, the 5% Convertible Senior Notes, which had a book value of $32.4 million, were trading at $96.00, which would equal a fair market value of approximately
$31.1 million.

On
December 31, 2009, the 5% Convertible Senior Notes, which had a book value of $54.6 million, were trading at or near par value, which would equal a fair market value of
approximately $54.6 million.

On
March 31, 2010, the New Convertible Senior Notes, which had a book value of $35.0 million, were trading at $100.265, which would equal a fair market value of
approximately $31.7 million.

FASB
ASC 820 "Fair value measurements and disclosures", formerly SFAS No. 157, establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to
measure fair value into three levels. 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 nonrecurring basis in our consolidated balance sheets. The following methods and assumptions were used to estimate the fair
values:

Asset ImpairmentsThe Company reviews a proved oil and gas property for impairment when events and circumstances indicate a possible decline in
the
recoverability of the carrying value of 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.

The
impairment charge in Turkey of $5.3 million which is recorded in discontinued operations for the period ended March 31, 2009, is 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.

GoodwillWe account for goodwill in accordance with FASB Accounting Standards Codification No. 350
"IntangiblesGoodwill and Other" ("ASC 350"). Under ASC 350, goodwill and indefinite-lived intangible assets are not amortized but are
reviewed annually (or more frequently if impairment indicators arise) for impairment.

18

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14FAIR VALUE MEASUREMENTS (Continued)

Asset Retirement ObligationsThe initial measurement of asset retirement obligations at fair value is calculated using cash flows techniques and
based
on internal estimates of future retirement costs associated with oil and gas properties. Significant Level 3 inputs used in the calculation of asset retirement obligations include plugging
costs and reserve lives. A reconciliation of the Company's asset retirement obligation is presented in Note 6.

Effective
January 1, 2008, we adopted the authoritative guidance that applies to all financial assets and liabilities required to be measured and reported on a fair value basis.
Beginning January 1, 2009, we also applied the guidance to non-financial assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date (exit price). The guidance requires disclosure that establishes a framework for measuring fair value expands
disclosure about fair value measurements and requires that fair value measurements be classified and disclosed in one of the following categories:

Level 1:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We consider active markets as those in which transactions for the assets or
liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.Level 2:

Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative
instruments that we value using observable market data. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data or supported by observable levels
at which transactions are executed in the market place. Instruments in this category include non-exchange traded derivatives such as over-the-counter commodity price swaps, certain investments and interest rate swaps.Level 3:

Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market
activity). Our valuation models for derivative contracts are primarily industry-standard models (i.e., Black-Scholes) that consider various inputs including: (a) quoted forward prices for commodities, (b) time value, (c)
 volatility factors, (d) counterparty credit risk and (e) current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Level 3 instruments primarily include derivative
instruments, such as basis swaps, commodity price collars and floors and accrued liabilities. Although we utilize third party broker quotes to assess the reasonableness of our prices and valuation techniques, we do not have sufficient corroborating
market evidence to support classifying these assets and liabilities as Level 2.


19

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Table of Contents

TOREADOR RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14FAIR VALUE MEASUREMENTS (Continued)

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

Fair Value Measurements UsingDescription

Fair Value
Measurement

Quoted
Prices
in
Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total
Impairment
LossThree Months Ended March 31, 20105% Convertible Senior Notes exchanged on February 1, 2010

$
35,065







$
35,065

$
Three Months Ended March 31, 2009Impaired oil and natural gas properties

$
14,733







$
14,733

$
(5,300
)


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:

Fair Value Measurement Unsing(Level 1)

(Level 2)

(Level 3)

TotalAs of March 31, 2010:Oil derivative contracts

$


$


$
855

$
855Total

$


$


$
855

$
855As of December 31, 2009:Oil derivative contracts








886


886$


$


$
886

$
886


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

Three months
ended March 31,
2010
Oil Derivative
Contracts

Year ended
December 31,
2009
Oil Derivative
ContractsBalance at beginning of period

$
886

$
Proceeds received on settlement


7


Realized gain


(7
)

Unrealized (gain) loss


(31
)

886Balance at end of period

$
855

$
886


20

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Table of Contents

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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Table of Contents

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:



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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:



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Financial Summary

For the three months ended March 31, 2010:



At
March 31, 2010, we had:



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:

Total

Less Than
One Year

One to
Three Years

Four to
Five Years

More Than
Five YearsLong-term debt

$
67,413

$
32,385

$
35,028

$


$
Lease commitments


549


109


348


92


Total contractual obligations

$
67,962

$
32,494

$
35,376

$
92

$



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

For the Three
Months Ended
March 31,2010

2009Production:Oil (MBbls):France


78


84Average Price:Oil $(/Bbl):France

$
70.50


39.20


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:

Type

Period

Barrels

Floor

CeilingCollar

January 1, 2010 - December 31, 2010


182,500

$
68.00

$
81.00


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:

Three Months
Ended
March 31,2010

2009Revenue:Oil and natural gas sales

$


$
1,362Operating costs and expenses:Lease operating expense





266Exploration expense





586Depreciation, depletion and amortization





52Impairment of oil and natural gas properties





5,300General and administrative expense


495


792Gain on sale of properties and other assets in Romania





(5,846
)Total operating costs and expenses


495


1,150Operating income loss


(495
)

212Other income (expense)Foreign currency exchange gain





(285
)Interest and other income





141Loss on early extinguishment of debtrevolving credit





(4,881
)Interest expense


(80
)

(140
)Net loss before income taxes


(575
)

(4,953
)Income tax benefit





Loss from discontinued operations

$
(575
)
$
(4,953
)


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:

For the Three
Months Ended
March 31,2010

2009Production:Oil (MBbls):Turkey





12Gas (MMcf):Turkey





89MBOE:Turkey





27Average Price:Oil ($/Bbl):Turkey





37.96Gas ($/Mcf):Turkey





10.28$/BOE:Turkey





51.22


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:

March 31,
2010

March 31,
2009Euro

$
1.3479

$
1.3308New Turkish Lira




$
0.5991Hungarian Forint




$
0.0043


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:



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

Exhibit
Number

Description

Incorporation by Reference1.1

Underwriting Agreement dated as of February 9, 2010, by and among the Company, RBC Capital Markets Corporation and Thomas Weisel Partners LLC

Incorporated by reference to Exhibit 1.1 to the Form 8-K filed on February 11, 2010.4.1

Indenture, dated as of February 1, 2010, by and between the Company and The Bank of New York Mellon, as Trustee.

Incorporated by reference to Exhibit 4.1 to the Form 8-K filed on February 3, 2010.31.1

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 CORPORATIONMay 10, 2010

/s/ CRAIG M. MCKENZIE Craig M. McKenzie President and Chief Executive OfficerMay 10, 2010

/s/ MARC SENGÈS Marc Sengès Chief Financial Officer


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