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

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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º our success in development, exploitation and exploration activities;

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º our ability to make planned capital expenditures;

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º declines in our production of natural gas and crude oil;

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º prices for natural gas and crude oil;

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º our ability to raise equity capital or incur additional indebtedness;

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º economic and business conditions;

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º political and economic conditions in oil producing countries;

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º price and availability of alternative fuels;

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º our acquisition and divestiture activities;

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º results of our hedging activities; and

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º other factors discussed elsewhere in this document.

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

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

EXECUTIVE OVERVIEW

We are an independent international energy company engaged in oil and natural gas exploration, development, production and acquisition activities. Our strategy is to increase our oil and natural gas

reserves through a balanced combination of exploratory drilling, development and exploitation projects and acquisitions. We focus on exploration activities in countries where we can establish large acreage positions. We also focus on prospects where we do not have to compete directly with major integrated or large independent oil and natural gas producers and where extensive geophysical and geological data is available. Our operations are located in European Union or European Union candidate countries that we believe have stable governments, have transportation infrastructure, attractive fiscal policies and are net-importers of oil and natural gas. Our financial results depend upon many factors that significantly affect our results of operations including the following:

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º the sales price of natural gas and crude oil;

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º the level of total sales volumes of crude oil and natural gas;

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º the availability of, and our ability to raise additional capital resources and provide liquidity to meet, cash flow needs;

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º the level of and interest rates on borrowings; and

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º the level and success of exploration and development activity.

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

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

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

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º The sale of a 26.75% interest in the SASB to Petrol Ofisi for aggregate cash consideration of $55 million, $50 million of which was funded on March 3, 2009, with the remaining $5 million due on September 1, 2009;

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º The Company has retained Stellar Energy Advisors, based in London, UK, to manage an open bid process to sell the Company's remaining 10% interest in the SASB, in addition to the onshore production, and 2.2 million net acres in exploration licenses that the Company currently holds in Turkey;

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º The net proceeds of the sale of the 26.75% interest in the SASB to Petrol Ofisi have been used to fully repay and retire the credit facilities with the International Finance Corporation;

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º The Company intends to use a portion of the remaining proceeds from the sale of the 26.75% interest in the SASB to Petrol Ofisi to continue to buy back a portion of its currently outstanding Notes on the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors;

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º A share buyback program was adopted by the Board of Directors in February 2009 for the repurchase of up to 1 million shares of Toreador common stock that may be repurchased in the open market at any time over the next 12 months. As of March 31, 2009 no shares of Toreador common stock have been repurchased pursuant to the share buyback program;

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º On February 23, 2009, the Company announced a plan to relocate its headquarters from Dallas, TX to Paris, France since the Company's operations are located in Europe notwithstanding the fact that the Company is incorporated in Delaware and listed on the NASDAQ Global Market. The Company has commenced the relocation process and expects to complete it by June 30, 2009;

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º Continued development of the Company's Hungarian assets. As announced on April 14, 2009, the Balotaszallas-E-1 ("THL Ba-E-1") well, which is located in the Tompa Block in Hungary, has reached its final total measured depth of 3,620 meters and successfully encountered the target geologic horizon as a 560 meter over-pressured section of predominantly thin, inter-bedded layers comprising siltstones, shale, and sandstones with some interspersed conglomerates. The fracing program is expected to be completed before the end of May 2009 and results are expected by mid June 2009.

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º The Paris Basin will remain the Company's core asset with current production of approximately 1,000 net barrels per day coming from low-decline, long-life assets. A comprehensive portfolio review of our fields and 461,000 net acres held pursuant to licenses is now underway. The results of the study will be launched as part of the three-year strategic plan we expect to announce at the Annual Stockholders Meeting in June 2009.

For the quarter ended March 31, 2009;

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º We had revenues from continuing operations of $3.4 million.

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º Operating costs from continuing operations were $8.9 million.

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º Loss from discontinued operations, net of income taxes, was $4.7 million.

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º Net loss available to common shares was $10.9 million.

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º Production was 84 MBOE.

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º Capital expenditures were $529,000.

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º Cash and restricted cash of $24.5 million.

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º We had a current ratio of 4.01 to 1.

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º We had a debt to equity ratio of 2.22 to 1.

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º Oil and natural gas properties held for sale of $14.7 million, which reflects at $5.3 million impairment of our SASB field in offshore Turkey due to the 25% reduction in the posted price of natural gas announced on May 1, 2009. We believe that this amount represents the fair value, less selling cost, of our remaining 10% interest in the SASB, in addition to our onshore production, and 2.2 million net acres in exploration licenses that are currently held in Turkey.

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, existing cash resources and the receipt of proceeds from planned disposals of our remaining interests in Turkey. As of March 31, 2009, we had cash and restricted cash of $24.5 million, a current ratio of approximately 4.01 to 1 and a debt to equity ratio of 2.22 to 1. For the three months ended March 31, 2009, we had an operating loss of $5.5 million and capital expenditures were $529,000. The restricted cash relates to a letter of credit to secure additional permits in Hungary.

During 2008, we saw oil prices rise to unprecedented levels and then in September we saw the start of a deterioration in the credit and equity markets which has continued to deteriorate further in 2009. We also experienced a 50% - 60% decline in oil prices from the highest prices received in 2008. As discussed further below, for the year ended December 31, 2008, we had a downward reserve revision of 37.41%. At December 31, 2007 the price used for evaluating our oil reserves was $95.72 per barrel as compared to the December 31, 2008 price of $34.29 per barrel. This 64% decrease in oil price had a severe impact on the economic life of our wells, but also on the discounted present value at 10% and the standardized measure of proved reserves. As discussed further below, these severe economic conditions have caused the Company to reevaluate its capital expenditure program for 2009 and how the Company will operate on a go forward basis.

In February 2009, the Company announced a new platform from which a new strategy will be built. The platform is built on: (i) reduction in overhead-through relocating our corporate headquarters to Paris, France, significant savings of general and administrative expense due to a consolidation of job functions and the expected sale of all the Company's remaining interest in Turkey; (ii) uses of cash-other than funding our capital program to meet minimum commitments associated with the Company's licenses, we expect that our primary use of discretionary cash will be used to reduce debt; (iii) a focused oil and natural gas portfolio review-the Company will refocus its efforts to those areas that offer the best chance of success and have a proven infrastructure for the oil and natural gas industry. We believe that our current acreage positions in France and Hungary can serve as the platform for growth and offer the Company the best opportunity to create stockholder value; and
(iv) performance management-the Board of Directors and management are committed to the best practices in corporate governance and will continually be reviewing and where necessary revising the procedures used to operate the Company. We intend to use third party expertise to review and challenge our procedures and methodologies, both operationally and administratively. Also performance management, actions followed by positive results, will become a driving principle in operating the Company.

On March 3, 2009, we closed the sale of a 26.75% interest in the SASB to Petrol Ofisi for $55 million. In accordance with the agreement, $50 million of the proceeds was paid by Petrol Ofisi upon closing and the remaining $5 million is due on September 1, 2009.

Simultaneous with the closing of the sale of the 26.75% interest in the SASB to Petrol Ofisi, we repaid the secured revolving credit facility with the International Finance Corporation. The total amount of the payment was $36.4 million, which was comprised of $30 million principal, $5.9 million additional compensation due under the credit facility as a result of our repayment (such additional compensation calculated under the terms of the credit facility as a percentage of the Company's earnings before interest, tax, depreciation, amortization, and exploration expense) and $500,000 for accrued interest and fees. As a result of the early extinguishment, we recorded a loss of $4.9 million for the period ended March 31, 2009, which was recorded in discontinued operations.

Following the retirement of the credit facility with the International Finance Corporation, the Company does not have a credit facility and currently relies on its cash balance to meet its immediate cash requirements. Management will consider securing a new facility in 2009, but given the current economic and financial market conditions due to the global credit market crisis, there can be no assurance that a new facility can be obtained on acceptable terms or at all.

Our capital expenditure budget for 2009 is currently estimated at $7.2 million and assumes a sale of our remaining interest in Turkey to be closed by September 1, 2009. This amount represents our 10% share of Phase II development cost in the SASB, our estimated share of the cost in the drilling of a Thrace Black Sea well after we are carried on the first $10.7 million of costs and the cost of installing a pipeline in Hungary in order to produce the reserves associated with the Szolnok permit.

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

We believe we will have sufficient cash flow from operations to meet all of our 2009 obligations. However, if we do not complete the sale of our remaining interest in Turkey, the cash flow from our operations is less than anticipated and if we have used up our cash we may also seek additional capital by:
(i) forward selling our crude oil and natural gas production; (ii) selling our interest in prospects and or licenses; (iii) selling our working interest in properties; or (iv) a combination of these actions in addition to issuing new debt or equity securities. We believe such actions will allow us to meet our capital commitments and that as a result, we will have sufficient liquidity for the remainder of 2009.

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

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

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

interest, if the closing price of our common stock exceeds 130% of the conversion price over a specified period. On or after October 1, 2010, we may redeem the Convertible Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Convertible Senior Notes to be redeemed, plus any accrued and unpaid interest, irrespective of the price of its common stock. Holders may convert their Convertible Senior Notes at any time prior to the close of business on the business day immediately preceding their stated maturity, and holders may, upon the occurrence of certain fundamental changes, and on October 1, 2010, October 1, 2015, and October 1, 2020, require us to repurchase all or a portion of their Convertible Senior Notes for cash in an amount equal to 100% of the principal amount of such Convertible Senior Notes, plus any accrued and unpaid interest.

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

In April 2009, we repurchased $16.7 million in principal amount of the Convertible Senior Notes on the open market for $12.7 million plus accrued interest and prepaid loan fees of $650,000. This repurchase will result in a gain of $3.4 million on the early extinguishment of debt, which will be recorded in the second quarter of 2009. After adjusting for the retirement of these Convertible Senior Notes the outstanding balance is $63.6 million and our debt to equity ratio would be 1.76 to 1. We intend to continue to buy back a portion of the currently outstanding Convertible Senior Notes on the open market or in privately negotiated transactions, subject to market conditions, applicable legal requirements and other factors.

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, 2009 for the periods shown:

                                            Less Than       One to         Four to       More Than
                                 Total      One Year      Three Years     Five Years     Five Years
Long-term debt                  $ 80,275     $       -    $     80,275    $         -    $         -
Lease commitments                  3,927           769           1,555          1,296            307

Total contractual obligations   $ 84,202     $     769    $     81,830    $     1,296    $    80,582

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

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations is based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Our significant accounting policies are described in Note 2 to our consolidated financial statements included in Form 10-K for the year ended December 31, 2008. We have identified below policies that are of particular importance to the portrayal of our financial position and results of

operations and which require the application of significant judgment by management. We analyze our estimates on a periodic basis and base our estimates on experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates using different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements:

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

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

Proved reserves are estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods as well as oil and natural gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery after testing by a pilot project or after the operation of an installed program has been confirmed through production response that increased recovery will be achieved. Proved undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. Proved . . .