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                                                                    EXHIBIT 10.5


                                                              EDWARD C. MARHANKA

                              EMPLOYMENT AGREEMENT

         This Employment Agreement is made as of May 1, 1997, by and between
Toreador Royalty Corporation, a Delaware corporation (the "Company"), and
Edward C. Marhanka (the "Employee").

         WHEREAS, the Company desires to continue to employ the Employee, and
the Employee is willing to continue to render his services to the Company on
the terms and conditions with respect to such employment hereinafter set forth;

         NOW, THEREFORE, in consideration of the premises and the mutual terms
and conditions hereof, the Company and the Employee hereby agree as follows:

         1.      Employment.  The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth.

         2.      Employment and Duties.  Subject to the terms hereof, the
Company agrees to employ Employee to render full-time services to the Company
as Vice President and Treasurer of the Company.  Employee shall have the duties
specified by the Bylaws of the Company for a Vice President and the Treasurer
or are customarily associated with such position, together with such other
duties as may be assigned to Employee from time to time by the Board of
Directors of the Company (the "Board").  Employee agrees to devote his full
time and attention to the performance and fulfillment of such duties, functions
and responsibilities as are necessary to discharge such duties, functions and
responsibilities, except for service for civic, charitable or non-profit
organizations and other non-competitive endeavors not interfering with his
duties hereunder.

         3.      Term.  This Agreement shall have a term of one (1) year
commencing as of May 1, 1997, subject to earlier termination as hereinafter
provided.  Upon mutual agreement of the parties, this Agreement may be extended
for additional one-year periods.

         4.      Compensation.  As compensation for his services rendered under
this Agreement, the Employee shall be entitled to receive the following:

                 (a)      The Employee shall be paid an annual base salary of
         $100,000 for the term of this Agreement.  Such annual base salary
         shall be payable in equal semi-monthly installments payable on the
         15th day and the final day (or the last business day preceding such
         day if it does not fall on a business day) of each month during the
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         term of this Agreement, prorated for any partial employment month.
         Such salary shall be subject to increase at any time by the Board in
         its sole discretion.

                 (b)      Upon execution of this Agreement, the Employee shall
         be granted by the Company an option to purchase 25,000 shares of
         Common Stock of the Company subject to and upon the terms and
         conditions set forth in the form of Option Agreement attached hereto
         as Exhibit A, which is incorporated herein by reference. The Company
         and the Employee shall execute and deliver counterparts of the Option
         Agreement in the form of Exhibit A simultaneously with the execution
         of this Agreement.

         5.      Other Benefits.  In addition to the compensation to be paid to
the Employee pursuant to Paragraph 4 hereof, the Employee shall be entitled to
be included in any medical and dental benefit plans, any pension or profit
sharing plan or any other fringe benefits which may be extended from time to
time to employees of the Company generally by the Board in its sole discretion.
The Employee shall be entitled to such vacation and sick leave as may be
authorized by the Board from time to time.  The time for vacation leave shall
be selected by the Employee subject to the approval of the President and
subject to the business needs of the Company.  Vacation leave shall be taken
within each employment year and shall be noncumulative. The Employee shall not
be entitled to vacation pay in lieu of vacation leave and any unused vacation
leave shall be deemed waived.

         6.      Reimbursement of Expenses.  The Employee shall be reimbursed
by the Company for any out of pocket expenses reasonably paid or incurred by
him in connection with the performance of his duties hereunder upon
presentation of expense statements or vouchers or such other supporting
information reasonably evidencing such expenses. Subject to the approval of the
President of the Company, the Company shall reimburse the Employee for
professional dues and tuition for professional seminars.

         7.      Confidentiality/Trade Secrets.  The Employee acknowledges that
his position with the Company is one of the highest trust and confidence both
by reason of his position and by reason of his access to and contact with the
trade secrets and confidential and proprietary business data and information of
the Company.  Both during the term of this Agreement and thereafter, the
Employee covenants and agrees as follows:

                 (a)      that he shall use his reasonable best efforts and
         exercise utmost reasonable diligence to protect and safeguard the
         trade secrets and confidential and proprietary data and information of
         the Company, including but not limited to its technical data, records,
         compilations of information, processes, and specifications relating to
         its properties, assets, customers, suppliers, products and services;



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                 (b)      that he shall not disclose any of such trade secrets
         and confidential and proprietary information, except as may be deemed
         by him to be necessary or desirable for the performance of his duties
         for the Company; and

                 (c)      that he shall not use, directly or indirectly, for
         his own benefit or for the benefit of another, any of such trade
         secrets and confidential and proprietary information.

         All files, records, documents, drawings, specifications, memoranda,
notes or other documents relating to the business of the Company, whether
prepared by the Employee or otherwise coming into his possession, shall be the
exclusive property of the Company and shall be delivered to the Company and not
retained by the Employee upon termination of his employment for any reason
whatsoever or at any other time upon request of the Board.

         Notwithstanding the foregoing, Employee shall not be required to keep
confidential or restrict use of any trade secrets or confidential and
proprietary data and information of the Company (i) which he may be required to
disclose at the express direction of any authorized government agency, pursuant
to a subpoena or other court process, or as otherwise required by any law,
rule, regulation or order of any regulatory body, (ii) which has become
generally available to the public by means other than by breach of this
Agreement, (iii) which was available to Employee prior to its disclosure by the
Company to Employee, (iv) which has become available to Employee from a source
other than the Company or (v) as to which disclosure or use the Company
consents in writing.

         8.      Remedies for Breach of Covenants of the Employee.  The
covenants set forth in paragraph 7 of this Agreement shall continue to be
binding upon the Employee, notwithstanding the termination of his employment
with the Company for any reason whatsoever.  Such covenants shall be deemed and
construed as separate agreements, independent of any other provisions of this
Agreement and any other agreement between the Company and the Employee.

         9.      Termination.  The employment of the Employee may be terminated
upon the occurrence of any one of the following events:

                 (a)      Voluntary by the Employee.  The Employee may resign
         with or without cause at any time during the term of this Agreement by
         giving fourteen (14) days prior written notice of termination to the
         Board.

                 (b)      Involuntary by the Company.  The Board, with or
         without cause, may terminate the Employee at any time during the term
         of this Agreement upon fourteen (14) days prior written notice to the
         Employee.





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                 (c)      Termination upon Death.  The employment of the
         Employee shall terminate immediately upon the death of the Employee.

         In the event of the termination of employment of the Employee prior to
the expiration of the term of this Agreement, the Employee shall be entitled to
compensation earned by him prior to the date of termination as provided herein,
computed on a pro rata basis to and including such date of termination.  Except
as hereinafter expressly set forth in Section 10 of this Agreement, the
Employee shall be entitled to no further compensation as of the date of
termination of this Agreement (other than salary, stock options, restricted
stock and other benefits which have been earned, become payable or vested but
not yet paid or exercised at the time of such termination), specifically
including but not limited to any unearned cash or stock bonuses. Any
termination of this Agreement shall be without prejudice to any right or remedy
to which a party may be entitled either at law, in equity or under this
Agreement.

         10.     Severance Benefits.  In addition to such compensation and
other benefits payable to or provided for the Employee, as authorized by the
Board from time to time and earned by the Employee as of the date of
resignation, termination, death or disability, the Employee shall be entitled
to receive and the Company shall pay or provide to the Employee the following
severance benefits in the event that the Company discharges the Employee
without cause or the Employee resigns for cause, to-wit:

                 (a)      The Company shall pay to the Employee a lump sum cash
         payment payable on the date of termination of employment in an amount
         equal to the annual base salary of the Employee which would have been
         payable to the Employee from the date of termination to the expiration
         date of the term of this Agreement; but not less than $50,000.

                 (b)      All stock options granted by the Company to the
         Employee, all contributions made by the Company for the account of the
         Employee to any pension, thrift or any other benefit plan and all
         other benefits or bonuses which contain vesting or exercisability
         provisions conditioned upon or subject to the continued employment of
         the Employee shall become fully vested and exercisable; provided,
         however, that if any such amount, benefit or payment cannot become
         fully vested pursuant to such plan or arrangement on account of
         limitations imposed by law, Employee shall be entitled to receive from
         Company an amount in cash payable on the date of termination equal to
         the total amount of benefit or payment which Employee will have to
         forfeit pursuant to such plan or arrangement on account of such
         termination of employment.

                 (c)      The Company shall, to the extent permitted by
         applicable law, promptly reimburse the Employee for all premiums the
         Employee pays for continuation of the Employee's health coverage under
         the Company's medical plan pursuant to the





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         Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
         ("COBRA") for the 12 month period following the date of termination.

                 (d)      The Employee shall not be required to mitigate the
         amount of any payment provided for in this Section 10 by seeking other
         employment or otherwise, nor shall the amount of any payment or
         benefit as provided for be reduced by any compensation earned by the
         Employee as the result of employment by another employer or by
         retirement benefits or otherwise.

         11.     Change in Control.  For purposes of this Agreement, a "Change
in Control" of the Company shall be deemed to have occurred upon the date any
"person" or "group" (as such terms are used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than
the Company or any "person" who on the date hereof is a director or officer of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, (a) as a passive investor
without Board or other representation, of securities of the Company
representing 25% or more of the combined voting power of the Company's
outstanding securities, (b) or in any other capacity of securities of the
Company representing 15% or more of the combined voting power of the Company's
outstanding securities, in a transaction which was not approved in advance by
the Board.  For the purposes of this Agreement, in the event any "person" or
"group" (as such terms are used in Section 13(d) and 14(d) of the Exchange
Act), other than the Company or any "person" who on the date hereof is a
director or officer of the Company, (i) commences a proxy solicitation to
acquire the right to vote more than 15% of the combined voting power of the
Company's outstanding securities, (ii) commences a tender or exchange offer
subject to Section 14(d) (1) of the Exchange Act to acquire the beneficial
ownership of securities representing 15% or more of the combined voting power
of the Company's outstanding securities or (iii) acquires beneficial ownership,
directly or indirectly, of securities of the Company representing 5% or more of
the combined voting power of the Company's outstanding securities, which proxy
solicitation or tender or exchange offer or acquisition of beneficial ownership
was not approved in advance by the Board, and the Board in response to such
proxy solicitation or tender or exchange offer or when such proxy solicitation
or tender or exchange offer is ongoing or in response to and within one (1)
year of such acquisition of beneficial ownership approves a transaction which
results in any person or group (including but not limited to such person or
group who initiated the proxy solicitation, tender or exchange offer or who
made such acquisition of beneficial ownership but specifically excluding the
Company or any "person" who is on the date hereof a director or officer of the
Company) acquiring beneficial ownership of, directly or indirectly, securities
of the Company representing 15% or more of the combined voting power of the
Company's outstanding securities or which results in the sale, lease, transfer,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all of the assets of the Company, then
such transaction shall not be considered





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approved in advance by the Board and a Change in Control shall be deemed to
have occurred upon the consummation of such transaction for the purposes of
this Agreement.

         12.     Involuntary Termination with Cause by the Company.  For the
purposes of this Agreement, the Company shall be deemed to have terminated the
Employee with cause if any of the following conditions existed:

                 (a)      The Employee shall have become disabled for a period
         of more than three (3) consecutive months;

                 (b)      The Employee shall have failed to substantially
         perform his duties and responsibilities as a Vice President or
         Treasurer of the Company (other than any such failure resulting from
         disability or any such actual or anticipated failures resulting from
         the Employee's resignation with cause) after a written demand for the
         Employee's substantial performance has been delivered to him by the
         Board, which demand specifically identifies the manner in which the
         Board believes the Employee has not substantially performed his
         duties; or

                 (c)      The Employee shall have engaged in conduct
         demonstrably and materially injurious to the Company.

         The Employee shall be deemed to have been terminated with cause under
the circumstances described in subparagraphs (b) or (c) above only if there has
been delivered to him a copy of a resolution duly adopted by the affirmative
vote of a majority of the entire membership of the Board at a meeting of the
Board.

          "Disability" as used herein shall mean any physical, emotional or
mental injury, illness or incapacitation, other than death, which renders the
Employee unable to perform the duties, functions and responsibilities required
of him under this Agreement.

         13.     Resignation with Cause.  For the purposes of this Agreement,
the Employee shall have resigned with cause if prior to his resignation a
Change in Control of the Company has occurred and, within twelve months
thereof:

                 (a)      The Company shall have removed the Employee from the
         office of Vice President of the Company or shall have altered his
         authority and responsibilities so as to be less significant than, not
         consistent with or not comparable to that which he held in his
         capacity as Vice President or shall otherwise limit or restrict his
         authority and responsibilities;

                 (b)      The Company shall have relocated its principal
         offices outside the Dallas, Texas, metropolitan area, or any
         requirement by the Company for the





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         Employee to be based anywhere other than the Company's principal
         executive offices in the Dallas, Texas, metropolitan area except for
         required travel on the Company's business to an extent substantially
         consistent with his previous business travel obligations;

                 (c)      The Company shall have reduced the Employee's annual
         base salary as in effect from time to time;

                 (d)      The Company shall have failed to continue in effect
         any compensation arrangement in which the Employee participates,
         including but not limited to those described in this Agreement, unless
         an equitable arrangement has been made with respect to such plan or
         arrangement in connection with the Change in Control;

                 (e)      The Company shall have failed to provide the Employee
         with all personnel benefits which are otherwise generally provided to
         executive officers of the Company or reasonably necessary or
         appropriate for the performance by the Employee of his duties as Vice
         President of the Company; or

                 (f)      The Company shall have failed to obtain a
         satisfactory agreement from any successor to assume and perform this
         Agreement as contemplated by Section 16(c) hereof.

         Any resignation by the Employee that is not "with cause" as defined in
this Section 13 shall be deemed to be resignation "without cause."

         14.     Remedies.  If either the Company or the Employee shall file
any judicial action for enforcement of this Agreement and successfully enforce
any provision of this Agreement or recover compensation or damages, the
prevailing party shall be entitled to recover from the other party an
additional amount equal to interest at ten percent (10%) per annum on the
amount recovered from the date such amount was due and payable together with
all expenses and reasonable attorneys' fees incurred in obtaining legal advice
and counseling respecting the respective rights of such party under this
Agreement and in prosecuting and disposing of such action.  The provisions of
this Section shall be cumulative and without prejudice to any other right or
remedy to which the Employee may be entitled either at law, in equity or under
this Agreement and shall not constitute the exclusive remedy of the Company or
the Employee for breach of this Agreement.

         15.     Notices.  Any notices to be given hereunder by either party to
the other shall be in writing and may be effected either by personal delivery
or by mail, registered or certified, postage prepaid, with return receipt
requested.  Personal delivery to the Board shall be to the President.  Mailed
notices shall be addressed as follows:





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                 (a)      If to the Company:

                          Toreador Royalty Corporation
                          530 Preston Commons West
                          8117 Preston Road
                          Dallas, Texas 75225
                          Attention:  President

                 (b)      If to the Employee:

                          Edward C. Marhanka
                          6234 Reiger Avenue
                          Dallas, Texas 75214

Either party may change its address for notice by giving notice in accordance
with the terms of this Section 15.

         16.     General Provisions.

                 (a)      Invalid Provisions.  If any provision of this
         Agreement is held to be illegal, invalid or unenforceable under
         present or future laws effective during the term hereof, such
         provision shall be fully severable and this Agreement shall be
         construed and enforced as if such illegal, invalid or unenforceable
         provision had never comprised a part hereof; and the remaining
         provisions hereof shall remain in full force and effect and shall not
         be affected by the illegal, invalid or unenforceable provision or by
         its severance hereof.  Furthermore, in lieu of such illegal, invalid
         or unenforceable provision there shall be added automatically as a
         part of this Agreement a provision as similar in terms to such
         illegal, invalid or unenforceable provision as may be possible and
         still be legal, valid or enforceable.

                 (b)      Entire Agreement.  This Agreement sets forth the
         entire understanding of the parties and supersedes all prior
         agreements or understandings, whether written or oral, with respect to
         the subject matter hereof.  No terms, conditions, warranties, other
         than those contained herein, and no amendments or modifications hereto
         shall be binding unless made in writing and signed by the parties
         hereto.

                 (c)      Binding Effect.  This Agreement shall extend to and
         be binding upon and inure to the benefit of the parties hereto, their
         respective heirs, representatives, successors and assigns.  The
         Company will require any successor to all or substantially all of the
         business and/or assets of the Company to expressly assume and agree,
         by an agreement in form and substance satisfactory to the Employee, to





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         perform this Agreement in the same manner and to the same extent that
         the Company would be required to perform it if no such succession had
         taken place.

                 (d)      Waiver.  The waiver by either party hereto of a
         breach of any term or provision of this Agreement shall not operate or
         be construed as a waiver of a subsequent breach of the same provision
         by any party or of the breach of any other term or provision of this
         Agreement.

                 (e)      Titles.  Titles of the paragraphs herein are used
         solely for convenience and shall not be used for interpretation or
         construing any word, clause, paragraph or provision of this Agreement.

                 (f)      Counterparts.  This Agreement may be executed in two
         or more counterparts, each of which shall be deemed an original, but
         which together shall constitute one and the same instrument.

         IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the date and year first written above.



                                        COMPANY:
                                        
                                        TOREADOR ROYALTY CORPORATION
                                        
                                        
                                        
                                        By: /s/ JOHN MARK MCLAUGHLIN
                                            -----------------------------------
                                            John Mark McLaughlin
                                            Chairman of the Board and President
                                        
                                        
                                        
                                        EMPLOYEE:
                                        
                                        
                                        
                                                                               
                                        /s/ EDWARD C. MARHANKA
                                        ---------------------------------------
                                        Edward C. Marhanka





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