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Executives

Nigel J. B. Lovett – CEO

Charles J. Campise – CFO

Michael J. FitzGerald - Exec. VP of Exploration & Production

Mr. Edward Ramirez - Sr. VP of Exploration & Production

Mr. William J. Moulton - VP of Technical

Analysts

Philip Dodge – Stanford Group

Ermi Bengledu – Trade Bank Securities

Owen Chivers – Source Capital

Steven Marney –Private Investor

Dory Stenberg – Private investor

Josh Anzelowitz – First New York

Patricia McLaughlin – UBS

Toreador Resources Corp (TRGL) Q4 2007 Earnings Call March 13, 2008 11:00 AM ET

Operator

Welcome to the Toreador Research Corporation Fourth Quarter Earnings Conference Call.

(Operator Instructions)

As a reminder, this conference is being recorded today, Thursday, March 13, 2008. I would now like to turn the conference over to Mr. Stewart Yee, Vice-President of Investor Relations. Please go ahead, sir.

Stewart Yee

Welcome everyone to the Toreador Resources Fourth Quarter 2007 Earnings and Operations update. My name is Stewart Yee and I am the Vice President of Investor Relations. Joining me today are Nigel Lovett, President and Chief Executive Officer and Mike Fitzgerald, Executive Vice President of Exploration and Production. Also present is Charles Campizi, Vice President of Finance and Accounting and Chief Accounting Officer.

We have a few prepared remarks and then we will open the phone lines for questions. Before we continue, I would like to remind everyone that this call is being recorded and that today’s call may include forward-looking statements that are subject to Safe Harbor provisions. I would also like to remind everyone that there are important risk factors which can be found in our filings with the Securities and Exchange Commission that may cause results to be materially different from any forward looking statements in this call. I will now introduce Nigel Lovett, President and CEO.

Nigel Lovett

Good morning everybody. Looking back over my notes from prior quarterly calls, I see that I spoke about our results but emphasized our strategic changes of direction. Today will be no exception. Our fourth quarter and full year and full year results are what they are. They are a sad testimony to a horrible year, burdened by amongst others, production disruptions in Turkey, charge off of dry hole and seismic expenditures, non-cash foreign currency translation charges and yearend impairment charges due to lowered reserves. I would point out that I believe the seismic charges will actually be validated by what we can realize in our farm out program and that our currency charges reflect the fact that the US dollar as I believe fell more in 2007 against the Turkish lira than any currency other than the Brazilian Real. I have apologized for our performance before. We are happy to answer any and all questions, but at this point, I want to move on to 2008.

We have been pursuing a range of strategic initiatives for some time, mainly focused on establishing an appropriate risk profile for our company, restoring our financial health and realizing or validating value. We are pleased that we are now in a position to indicate real progress. We have referred many times to our exploration programs, now being funded with other people’s money through farm outs. Mike Fitzgerald will talk in more detail about that, but I do want to emphasize how much money others are prepared to pay to earn an interest in our acreage. There is a chance that we will participate in up to 11exploratory wells this year at no cost to us.

The P&L charges for dry hole costs and seismic aggregating approximately $36 million in 2007 will be happily absent from our 2008 results. The second strategic initiative which we allude to in today’s press release is the fact that we have solicited and received a number of offers for a portion of our working interest in our Turkish Black Sea gas project or what we call the SASB. The reasoning behind this is as follows; first, this has proved to be a bigger and more challenging project than our company can afford. I mean that from both the risk standpoint and the financial standpoint. We cannot afford to be financially exposed to $20 million wells going forward and our ability to tolerate the risks of a complex offshore play like this is simply less than what was originally hoped. It is therefore time for us to bring in a strong sophisticated partner and monetize a portion of our investment. This will of course reduce our net revenues, but it will also reduce our share of capital expenditures going forward.

Given the modest prudent reserves credited to Turkey at yearend by our independent engineers, we will potentially be selling very few reserves at least according to their estimates. However, we expect to continue having an operational and financial participation in the upside potential of this project.

Finally, the monetization of this investment will also allow the stock market to see how the oil and gas market values the SASB. We expect to make further announcements on this in the course of the next few weeks. Finally, let me address yet again our cash flow profile. Our French oil production, half of which is hedged at approximately $100.00 per barrel through September would generate sufficient free cash flow to cover all of our costs and contribute to our share of development capital expenditures in the Black Sea. We believe that our Turkish cash flow given our restoration and production following the November shipping accident will provide the balance of those development expenditures and more.

As I said earlier, we are happy to answer any and all questions at the end of our presentations, but at this point, I would like to ask Mike Fitzgerald to give you an operational update.

Mike Fitzgerald

In the offshore SASB area of Turkey, as of this morning, all three tripods have been connected and we have been informed by TPAO that starting eight o’clock tomorrow morning, Ankara time, production will commence from the third and final platform to be tied in via Ayazli tripod. We have been notified that gas will be accepted at that point by the transportation company. As referenced in our press release, we are presently realizing $10.21 for our gas and come May, there will be an increase to $11.00 on MCF as mandated by the gas contract. As has been mentioned, we are evaluating these offers, foreign interest in the SASB and we will be advising you accordingly.

In Hungry, the seismic is getting ready to begin on our zone lock permit and drilling is expected to commence in early April where two wells will be drilled, the aggregate program $10 million, $7 million for drilling and $3 million for the seismic 3D program on the zone lock block.

Additionally, within the next week, we expect to sign the final papers on the Tompa exploration program which will see a highly sophisticated European oil and gas fund come in to drill a test below 3200 meters, an extremely exciting and interesting gas play on the Tompa permit. This well, as I have mentioned could cost as much as $16 million and can open up a tremendous amount of reserves within the area.

In Turkey, several different farm outs are in the final stages and close to signing. On-shore Southeast Turkey, we expect within the next week to two weeks, we will be signing the final farm in arrangement on a block on shore. In the Black Sea, off-shore trace, again we are going to be farming out an interest in that particular group of blocks and this too is expected to be completed within the next few weeks. Other permits are being shown the potential partners and we are encouraged and hopeful by their interest that additional farm outs will be completed in Turkey.

In France, production stays constant at approximately 1100 barrels of oil per day with excellent oil prices as Nigel has mentioned. Production from our Neocomian field, the oldest field in the Paris basin was actually up 3% last year over the previous year again demonstrating the long life of these reserves in the Paris basin.

Additionally, we expect by month’s end to be in a position to show three prospects on three of our different permits within the Paris basin to interested parties interested in coming in to drill wells on these particular opportunities.

In Romania, 2D seismic is being interpreted and prospects mapped on both the Fauresti and Moinesti where seismic where shot in the latter part of 2007. The 3D seismic survey over the Fauresti permit is also being mapped and then all three cases, we expect to have drillable prospects ready by the third quarter of this year.

A number of companies have expressed interest in all three of these permits and we have told the various interested parties that come the third quarter, once mapping is completed, we will be entertaining offers.

As Nigel said, we could during the course of the year have as many as 11 wells drilled on exploration opportunities in the countries where we are involved. This could have an aggregate expenditure for exploration for seismic and drilling above $70 million. We think this demonstrates the industry’s confidence and interest in the areas where we are located and in the prospects that we have delineated. We look forward to an exciting year on the exploration front and have minimal costs associated with that. At this time, this wraps up our operational review, and I will turn it back over to Nigel. Thank you.

Nigel Lovett

We will take any questions you would like to ask.

Question and Answer Session

Operator

(Operator Instructions)

Our first question comes from the line of Philip Dodge with the Stanford Group. Please go ahead.

Philip Dodge – Stanford Group

Could you go through the time table as you see it now on development of SASB Phase II taking into consideration the new ownership?

Nigel Lovett

This will not really, Phil, even if there is a deal that we accept and is successful, it will have no change or disruption on the overall timetable, again, our cash position is such that we could fund Phase II development out of the cash flow that we have off of Phase I. It is more of a strategic decisions on how we want to go forward, but this will cause absolutely no disruption or change to Phase II development which is again being operated by TPAO and we forecast again in late 2009 for gas from Phase II to becoming online.

Philip Dodge – Stanford Group

And has there been any change in the estimated costs, the 100% cost which I guess would be your share would be reduced by how much you sell?

Nigel Lovett

The 100% cost there is nothing that has come out since last year when we have our preliminary indications. We expect in April to have a TCM/OCM over in Ankara with all parties participating in which case any changes a positive or negative to the overall program will be discussed and put forth by again TPAO with the operator, but this time, there has been no indication from a timing or a capital expenditure side that there should be any changes.

Philip Dodge – Stanford Group

Alright, appreciate the information, thanks.

Operator

Operator

(Operator Instructions)

Our next question comes from the line of Ermi Bengledu with Trade Bank Securities. Please go ahead.

Ermi Bengledu – Trade Bank Securities

I had a question regarding the lease operating expenses. In the last conference call, you mentioned that the lease operating expense of $2.9 million was taken into consideration the maximum amount of lease operating expense from the Turkish operations, I am trying to understand why the lease operating expense went up to $4.3 million and if you can give me a break out of that number as far as how much of that number is coming from the Turkish operations and what the ongoing rate of this expense will be?

Charles Campisi

The answer to your question is for the Turkish operations due to the shipping accident that happened in November, we had additional operating cost of around $700,000.00 to $800,000.00 in repair work that was done on the Achaia line and there is an additional $700,000.00 to a million dollars, I cannot remember the exact number in work over cost for a work over program that we started in our French fields.

Ermi Bengledu – Trade Bank Securities

So what are the ongoing rates, what is the rate going to be going forward like in 2008 on an annual basis or quarterly basis? Do you have a number?

Nigel Lovett

In France, on an annual, or on a per barrel basis, it should be approximately $18.00 a barrel. In Turkey, it should be around $10.00 to $12.00 a barrel.

Operator

Our next question comes from the line of Owen Chivers with Source Capital, please go ahead.

Owen Chivers – Source Capital

Thank you good morning. My question revolves quite around the TPAO approval process for either farm outs or outright sales. What do you foresee, what procedure do you need to get their approval if necessary to on any farm outs and sales and also, are you entertaining any thoughts of possibly selling outright portions of trace or other operations or for that, any other operations other than farm outs than with just outright sales. Thank you.

Nigel Lovett

The first part of the question, the process is clearly defined within the joint operating agreement which allows TPAO or for that matter or other partner the right to pre-empt a sale of assets by matching the price that is offered on a particular sale of reserves. It is a rather standard procedure. So if something is a direct sale that somebody offers. As a direct purchase offer on a portion of our reserves, it would run through that procedure and it is very well defined on how that follows. As far as the sale of reserves in Turkey or the sale of an operation in any of our entities, the company has always been and will continue to be open to any type of beneficial alliances, be it farm outs, joint ventures, sales, anything that would benefit the company and at shareholders we are obviously always open to.

We have no pre-conceived exclusions in any way, shape or form. We are out to do what is best for the company and for the shareholders. At the present time, other than the farm outs in Hungary, the potential farm outs in France and Turkey and then the various considerations on SASB, that is really the sum of what is going on at the present time.

Operator

Our next question comes from the line of Steven Marney, private investor, please go ahead.

Steven Marney –Private Investor

This may be a well known answer but, why are the prices for Romanian gas only 60% of the prices we receive for Turkish gas and the second that you could speak to some of the future developments you expect for other Turkish permits in the longer run.

Nigel Lovett

In Romania, the situation is we have a country of very hardworking, industrious people who due to the subjugation that they have to undergo for a number of years was left with an economy and a populous that were really struggling. They too have imposed world price gas market prices on Romanian economy when they joined the EU would have been a serious blow to their recovery and their joining the world community, therefore it was allowed that they gradually integrate the prices and increase them on a quarterly basis so that the gas price is increasing in Romania and that is why it is lagging behind the gas price in Turkey or the projective gas prices in Hungary. It is really a concession to the Romanian economy and we do anticipate that there will be a constant increase in gas prices at a faster percentage rate than any of the increases inside Turkey or Hungary until they do reach the standards in the Eastern Europe. This may take another year, it may take another 18 months but we do anticipate that everything will eventually reach a level playing field.

On the case of continued work within Turkey, we have a spread of offshore and onshore permits. The three permits down in the South East area. One of those permits the Cook area is the permit that we believe we will have the final signature on and a relatively short amount of time and this will involve then seismic and make them potentially well at being drilled by the later part of this year. The Vam permit is being reviewed. It is a million acres in Far Eastern Turkey. We do not have any one to the point of signing yet on Vam so that is still on the working progress stage.

As we have mentioned, offshore in the Thrace area, that group of blocks company, we believe we will be signing the final papers within the next week to two weeks that will see seismic and the drilling of a well potentially by the end of this year or early next year. Other blocks in the offshore area are open for farming specifically the Samsung and Trapson blocks and people have expressed interest to us and are reviewing the data on them. That basically covers all of the area with the exception of SASB and the Western Black Sea area outside of SASB and again, we are on ongoing exploration, both mapping and evaluation wise and we await any proposals from the operator TPAO on any wells on a go-forward basis.

Operator

Our next question comes from the line of Dory Stenberg, private investor, please go ahead.

Dory Stenberg – Private investor

I have two questions. What is your cash position now.

Nigel Lovett

We expect to end the month with approximately $16 million of cash, of which does not include what is defined as restricted cash which is probably another $5 million dollars in deposits and escrow funds associated in part with a legal claim on insurance on an accident in the Black Sea a few years ago and in part associated with a concession that we are negotiating to get in Hungary.

Dory Stenberg – Private investor

I missed the very beginning of that. You said 16 right now?

Nigel Lovett

It is 16 at the end of this month, at the end of March.

Dory Stenberg – Private investor

You would hope it would be over 20 in the last call but the Turkey disruption is why its down…

Nigel Lovett

Yes, it is partly that, it is partly that some large receivables that we had at the end of the year did not come in when we hoped that they would. Part of which was from the operator of the SASB, TPAO, that has come in and the balance was coming in or has come in.

Dory Stenberg – Private investor

Are you estimating what the balance will be at the end of the next quarter?

Nigel Lovett

We believe that we will be cash flow positive of the capital expenditures through the year and we expect to end the year with more cash than we have at the moment.

Dory Stenberg – Private investor

And this is probably a basic question but one that still confuses me. Your work is based in Turkey, Romania, France, and Hungary. Why is it that the currency charges work against you? So that if the Euro increases against the dollar or the Turkish lira out course increases against the dollar, you bear the brunt of it.

Nigel Lovett

I tried to answer that on prior calls, it is an extraordinarily a complicated accounting problem. Let me ask our Senior VP finance to perhaps to a better job than I have done in prior quarters.

Charles Campizi

And I doubt that I will make much more sense than the rest of the world has been trying to explain this. In France our functional currency is the Euro, whereas in Turkey, Romania and Hungary, the functional currency is the US dollar. Currency changes in France go on the balance sheet in the equity section to other comprehensive income whereas changes primarily in PP&E in Turkey, since the dollar is the functional currency. Those charges go to the income statement to gain or loss on foreign currency or pre-value translations.

Dory Stenberg – Private investor

I do not understand what you mean by the functional currency in Turkey is the dollar. It is not.

Charles Campizi

In our accounting world you have to define what is the functional currency of an entity that you have in a foreign location and you evaluate that periodically based on what are the primary vendors paid in or they paid in the local currency or they paid in US dollars. What are the sources of your revenue? Is it in the local currency or the US dollar, when you have sales of production, is it based on the local currency or the US dollar? The majority of our capital costs that are incurred in Turkey, Hungary and Romania are paid in US dollars, thereby making the functional currency the US dollar. We will be re-evaluating Turkey at the end of this year and when we do have revenues for a full year, there is a more than likely chance that the functional currency in Turkey during 2008 will change to the Turkish’s Lira, thereby eliminating these swings on our income statement going to the FX gain or loss.

Dory Stenberg – Private investor

So, I understand you, the Euro which gained 11% against the dollar in 2007, did that work in your favor in France?

Charles Campizi

It worked in our favor, but in France since the Euro is the functional currency that change did not go to the income statement. It went on the balance sheet in the equity section of the balance sheet and accumulated other comprehensive income.

Dory Stenberg – Private investor

And why not use the Euro as the functional currency in Turkey. Most Turks do not even want to do business with the Lira because it is too volatile. The Euro has became the currency of big business there.

Charles Campizi

Well, in Turkey with our contractors that we have used in the SASB project. The majority of the bills we pay for the drilling contractor for the installation and construction of the tripods, for the construction and installation of the pipelines that we have built and laid, have all been US dollar contracts. We would have loved to have the Turkish Lira or the Euro as the functional currency in Turkey. However, it is not our choice. It is generally accepted principles in what is the functional currency and after we evaluate it the proper currency that uses our functional currency in Turkey, Romania and Hungary, it turns out to be the US dollar.

Dory Stenberg – Private investor

So it is your choice or not your choice?

Charles Campizi

It is not my choice, it is not Toreador’s choice, it is generally accepted accounting principle. It is how you evaluate which currency is the functional currency.

Dory Stenberg – Private investor

But you said in 2008 that that functional currency could change to the Turkish Lira, so it seems like it is something in your power to change. Well, it is in your power to change the effects and circumstances change and you are required according to generally accepted principles to re-evaluate your position as facts and circumstances change.

Dory Stenberg – Private investor

Probably that it would not be the dollar at some point in 2008 they will switch to the Lira?

Mike Fitzgerald

There is a very good chance that once we have a full year production because our gas sales contract is paid to us in the Turkish Lira.

Dory Stenberg – Private investor

Thank you, it is confusing but I appreciate it.

Mike Fitzgerald

It is, I hope I explained it to someone’s understanding.

Dory Stenberg – Private investor

The thing that is confusing to me is that, why the Lira hurts your bottom line, yet your Euro does not go to the bottom line in France.

Nigel Lovett

Get in touch with our auditors.

Operator

Our next question comes from the line of Josh Anzelowitz with First New York

Josh Anzelowitz with First New York, please go ahead.

Josh Anzelowitz – First New York

I am just wondering, if you sell your interest in Turkey, what are you going to do with the cash proceeds, do your bond covenants require that you replace the debt or would you do some kind of share buy back?

Nigel Lovett

Good question, we are still evaluating the alternative uses of proceeds depending on the amount that we get and the timing that we receive that amount.

Josh Anzelowitz – First New York

What were your expectations beyond that…

Nigel Lovett

I would say, it is a second quarter event. The covenants of our convertible debt do not require us to buy back those bonds. Although, we can see fit to tender for some if we feel that is a constructive use of proceeds. Similarly the loan facility that we have with the IFC is probably primarily if not exclusively a function of collatoralization of (audio gap) IR French reserves and therefore we would not expect much if any obligation to pay back a portion of that credit facility if we were to sell a portion of our Turkish reserves

My second question is; if your enterprise value is below your TV10, would you guys consider selling some of your more mature assets like, for example, france, in addition to your Turkish assets.

Well we have considered a range of alternatives to come up with our strategic plan. The driving force here is that we want to change the risk profile of our company. What we have here at this point is two principle assets, which are really at the opposite spectrum of extremes of the spectrum of risk. There is the French oil production, which is pretty much steady state if not slightly increasing each year. The real risk there is not so much a production risk as much as a price risk, obviously the prices worked very much in our favor the last 12 months. But that’s a low risk asset as we see it in this industry. At the other end of the spectrum, you have what I would characterize, at least for a company of our size, as a high risk asset, hopefully high potential too, but a high risk asset, which is the Turkish off-shore gas play. We have seen, if you’ve followed our company for more than the last 12 months, you will know that we have seen cost overruns, we have seen delays in getting gas onto production. We have seen in the last 12 months two marine incidents that have disrupted production. In the last case, it shut down the whole pipeline system and we own 36.75% of that. A deeper water well, which is going to be the bulk of the wells going forward is probably going to cost us something between $15 million and $25 million depending on the rig rates in 2009 and 2010 and we just do not feel that we should be exposing our self to that percentage of that amount at this point in our company’s history and situation. So the strategy is to change our risk profile by recognizing that we have obligations to pay off our debts at which the convertible debt of course is putable to us in October of 2010, that some way away but it is at least on our radar screen that we have an obligation to realize value of the shareholders and that can be done as you know in any number of ways but it seemed to us that we should reduce our exposure to the higher risk asset portfolio we have got rather than the lower risk at this point.

Josh Anzelowitz – First New York

I mean that that is an extremely fair point, but I guess what I am trying to get at is, you know Toreador is certainly not the only energy company out there. Look at the oil, natural gass. All of these classes have practically doubled if not tripled over the past 18 months to two years and in the meantime this company has gone from 25 to 7 and so would you guys consider, the assets are certainly there, I mean the issue is utilization, would you guys consider just putting yourselves up for sale?

I understand that you are trying to defray some of your risk in your riskier assets but just the sum of parts versus the total company, would you guys consider putting yourself completely up for sale, because just from a breakup value this company just seems to me by my analysis, it is certainly way higher than where it is trading out today.

Nigel Lovett

We would agree with that, I think that we are in no way entrenched to the point that we would not consider a sensible offer for our company.

Josh Anzelowitz – First New York

What would you consider sensible?

Nigel Lovett

I am not in a position to answer that. But I think what I would say is that we think that the value of our company is a sufficient premium over today’s market price. That it is unlikely that in a conventional M&A transaction, which is driven by a function of a premium over the current market that we would realize that value in a in and out sale of the company. You know I think that the better way to go, if you want to just go through a liquidation to get the full value would be to do a liquidation, although…

Josh Anzelowitz – First New York

Because the assets are geographically located, so different buyers would be interested in different assets, it would be more of a peace meal transaction. Have you spoken to any like bankers or is there somebody else to help facilitate finding somebody like that?

Nigel Lovett

No, we have not. As I have said the idea of approaching bidders for our company offer share price of $7.00 or $8.00 a share is still not going to get us to the value we would like because we think as you do that the stock is sufficiently undervalued today that typical premiums in the M&A market is not going to get us to the valuation that would be acceptable to our principle shareholders and so, we have not approached that. What we have done is we have looked at a number of alternatives and the first one that we have looked at is to try and monetize a portion of our investment in Turkey and we think that that will highlight, as I indicated earlier, what that asset is really worth.

Josh Anzelowitz – First New York

I understand. That is a very fair point, but I think to your shareholders, to the extent that you do monetize an asset, reinvesting in the company, which by my calculations, I am not going to pull out my calculations, I am sure you have your own and know probably far more than I do. To the extent that you monetize those assets, to do a stock repurchase or to do something like that. I think that would give the market more sense of, you know the company went in and bought back quite a bit of their shares at 8 dollars. That would give the market a much better understanding how you yourself value the company.

Nigel Lovett

I would agree with that. Sorry, did I answer your question?

Josh Anzelowitz – First New York

You did sir and I really do appreciate you taking time…

Nigel Lovett

No, not at all, that is a very good question.

Operator

Our next question comes from the line of Roger Benson with Number One Corporation, please go ahead.

Roger Benson – Number One Corporation

Mike, could you give us a little insight on the startup again of production in the SASB. I mean we have a well that had six zones in it and the lowest zone went down some months ago and it seemed to tear up the reserve engineers a lot. They gave us reserves far less than what I would think they really are. So have you moved up the hole in that well and what in general are we looking at in the new production, coming on when we get all started up tomorrow.

Nigel Lovett

Roger, I think you must be reading my drilling report but I am not sure how you are getting them but we actually got an e-mail from TPO this morning and by recommending some of the official zones to perforate in the Dogu and they have got the unit on the deck and we have given back our agreement to move up the holes on the next set of perforations. So we are cognizant on trying to do remedial work on the Dogu 1 and the Dogu 2 to bring them up to where they should be. Where we would like them to be, they have been the challenge in the Akaya platform which did not have near the number of zones have just held just rock steady since it went on production last May. Reserves on the Akaya actually went up. Last year, the reserve changes and the negative direction occurred on Dogu, where we have had these challenges.

So, again we are hopeful that some remedial things that are being considered by the operator and our selves will increase the production on Dogu and we are very hopeful that Yassily will perform like Akaya and when he comes on tomorrow and again we are still in a very early stage we have not had even a calendar year of production, let alone a true year because of the disruptions of production out there. But we are very cognizant of trying to increase the production and we are coming at the hole.

In the Dogu 2 soon and we will be perforating additional zones.

Roger Benson – Number One Corporation

Well that is quite encouraging because off of the press release that went out, it would seem that we are producing $16 million a day now gross and we are gong to add $15 million so that get us up of $30 but that would then not include Dogu 1 and 2 that you just mentioned that have to be reworked subsequently.

Nigel Lovett

Yes, and Dogu 1 and 2 are producing at a very very small rate in the overall grand scheme of things and this is designed to increase them and again just as in the world of petroleum engineering, as you perforate more zones and bring more gas on if you are having challenges from water production or anything of that nature, it can help lift that water and increase production even more than just what you should expect from perforating and another few intervals so it is still very much in the evaluatory stage and the interventions on these two wells we are still looking at a number of options.

Roger Benson – Number One Corporation

It sounds like you are going to be making over a thousand dollars a day to me and that looks good.

Nigel Lovett

Well, we are working on it.

Operator

Our next question is a follow up from the line of Ermi Bengledu withTrade Bank Securities

please go ahead/

Ermi Bengledu – Trade Bank Securities

Just a follow-up question regarding, lease operating expense of $10 per barrel number that you gave me. That takes into account the oil production from Turkey Correct ?

Nigel Lovett

Yes it does.

Operator

Our next question is a follow up from the line of Owen Chivers. Please go ahead.

Owen Chivers – Source Capital

I would like to go back to the strategic planning and the fact that, I think we all agree as stockholders –the sum of the parts are worth more than where the company is trading for it right now. You have answered the question with regard to a total sale of the company, and the M&A and that that premium is not going to be attractive off the current price but could you speak a little bit more about the concept of liquidating piecemeal the company and maximizing stockholder value that way. It seems that they are all severable parts and that they would add up to a lot more than $7.00 a share. And if you do farm outs it is going to take years to get the value up to the true, to get stock price up to the true value, where if you would have entertained liquidating the company, you know, the stockholders would be rewarded much sooner and maybe fully rewarded.

Mike FitzGerald

I am going to jump in real quick before Nigel gets to answer on those strategic financial side. From someone such as myself who is more on the technical side. In each one of the countries, where we are, if we are talking about the sum of parts and et cetera or selling any of the parts, each one of those areas I believe has significant upside potential in the permits that we have. The length of time in realizing positive cash out of Turkey was obviously a result of being on offshore situation and even in the true sense of the word, I mean the very first well in a vary frontier area was drilled and completed in October of 2004 so although it seemed like a lifetime to those of your who have invested and some of us on the inside also, it has been three and a half years since the first well in this area of the Black Sea was drilled and all the various accomplishments.

In our more, not mature, but established infrastructure areas, let us say the Paris basin. This question came up just the other day in a board meeting. If we do drill these wells in the Paris Basin, if they are successful, what type of lag time are we seeing between the time when we drill the well and test it and bring it on production to cash flow there? And there we start talking in terms of months, not years in an area where you are on an onshore situation and you are talking about installing a tank battery, aerospace and just because I know one of the other callers mentioned. France is a potential sale target. Again Paris basin, no gas,,all oil, easy to drill, easy to produce, you install the tank battery and literally within a few months you are generating cash especially with it being oil and these prices on something that we anticipate not having to have any investment in our present strategic mode of farming out. We have three permanent applications that we put in, in the Paris basin, large blocks that on two of the three, the concurrence period has closed, no one else can top file on us, the third will post here in a week, which is a currently new play that we have devised. We are quite excited about, as is the French oil authorities, there is no guarantee we are going to get these permits. We are hopeful we will. There is nobody else that has applied for them so we are hopeful. In non of the counties, Hungary, Romania, France, (inaudible) Toreador France, Toreador Romania, to sell any of these entities, we would not get the potential value for these undrilled prospects, these undrilled permits that I think hold a considerable more potential than what we have at the present time in the way of reserves. Now that is from a technical standpoint. Nigel may want to add something from the more financial aspect.

Nigel Lovett

Your question is more than legitimate. As shareholders here we certainly do not like to see the shares trading where they are. We think they are worth a significant premium of where they are trading today. I that I made a couple of points. So I think first of all we are a very under researched company where the familiarity of the company of its activities and its potential is not perhaps was well known as it might be. I think that we have one research man on this core that I am aware off who is very good at asking the questions. We have another research company that is not on this call that is perhaps even higher profile unfortunately and very rarely asks any questions ad puts up their research and it is in my view, it is full of errors and it is pejoritive for reasons known to them but in any event, I think that my view would be is that the challenge for this year and it goes back to our strategy is to either validate what we have or get out and my view is that we will show you in the course of this year what we have, we will validate values. We will do everything we can to enhance the share price in a variety of ways. And if the shares are still where they are at the end of this year, then I think that we have some very, very tough questions to answer and we go from there.

I agree, we cannot as custodians of your money and mine, continue to work on a basis where that money is valued at a substantial discount to its real value. So what I am suggesting is that last year was a year where we began the process of transforming our company. This is year is a process when we have to prove that we can transform and have transformed our company and if we fail in that regard and the market continues to have give us no credibility then I think it is perfectly appropriate to consider other alternatives. It is not acceptable to anybody on this call for the shares to flounder at $7.00 or $8.00 per share.

Operator

(Operator Instructions)

Our next question is a follow-up question from the line of Steven Marny, please go ahead.

Steven Marney –Private Investor

On this accident which buries the pipeline. Did anything change in terms of the regulations from the local authorities to prevent these kinds of things in the future or are they just very low frequency events or just something you live with?

Nigel Lovett

They are very low frequency events because this is the first production in the black sea for Turkey. There has never been a pipeline in the Black Sea offshore Turkey so there were no regulations to govern. And again, what we have done is taking steps to protect the pipeline with concrete locks if you will that will protect particularly the junctions which is what the problem was here so there is a wide junction where the Acaya portion came off the main line and there were additional flanges and valves at that intersection. We will be taking remedial steps to protect the pipeline in general and these particular areas but there were no rules or regulations violated by the fishing boat or by ourselves, again, this was mentioned earlier, this is frontier area if you will.

Steven Marney –Private Investor

Well, since particularly given that you are going to be that you have all of these other permits there and you are going to be inveloped in them them and the SASB this becomes more and more concerning, are they going to do something with like requiring GPS systems on fishing boats or are we just going to have an increasing problem corresponding with the increasing penetration of pipelines.

Nigel Lovett

Again the protection over the pipelines, with these concrete implacements, protection at the junctures should protect these particular pipelines, also as this area becomes better known as an oil and gas for the gas producing area with pipelines. A year ago, two years ago there was no pipeline there so the fishing boats were only were not aware but there is a bigger and better effort to advice the fishing industry in that area of the presence of the pipelines and the steer clear-up of this particular area. So there are steps being taken both from our side and from the local marine side too, to prevent such an incident from happening again.

Operator

Our next question comes from the line of Pat McLaughlin with UBS

Patricia McLaughlin – UBS

My question relates to the farm ends that are in prospect for this year and Mike can you detail for us a project by project, if you shoot a seismic and if you drilled the well, you know, after you interpret the seismic and so on and so forth. How many projects would you expect to at least have a well drilled to understand whether the first well was a bust or whether it is good or whether there is a way to do something better on the next well. Are we going to get any wells down this year that could give the story a little bit of pizzaz.

Mike Fitzgerald

For certain, the two wells on the zone lock block, one of which starts in April. It should take about four weeks or so to drill and then immediately after that, the second well will be drilled. We should have results off of both those wells by mid-year. The deeper well on the Tampa block is going to be a late third quarter, early fourth quarter event. It will be a deeper well, it will take a while to get down and then it will need stimulation. It is anticipated as a well that will need to be cracked but conceivably that well will have results by the year end.

Again France, the well, it is a quicker event, it is not instantaneous thing because there is the various paper work and procedures on having an implantation report filed and approved by the local authorities but again it is a little bit of oil country there in the Paris basin so it is not an unknown, quite possibly that we would be in a position to have one or more of those three wells drilled by year end. Romania is probably unlikely but possible that more than one of those wells will be drilled but we are very hopeful that one well would be drilled in Romania and maybe as many as many as two in Romania this year and that is certainly what we are shooting for. So, again the number 11 is a potential number. I would say somewhere in that 7 to 11 total number would be number of wells that we have down on have results on by the year end.

Operator

Our next question is a follow-up question from the line of Ermi Bengledu with Trade Bank Securities

Ermi Bengledu – Trade Bank Securities

I have a follow-up question to the operations in Turkey, in Black Sea – the accident. I think when you first made the announcement, you said there was an insurance against such accidents and even with that insurance in place, you had to pay $700,000 to $800,000, I guess for repairs. Going forward, are you protected against these accidents, do you have the same insurance policy in place.

Nigel Lovett

We have got the same insurance policy in place all accidents are insurance claimed situations you pay in advance to do the repair work, you then file the claim with the insurance company and then we wait for the underwriters to pay off and send us the money. We expect sometime in the second quarter to get our refund from the insurance on the costs that we pay through the repairs to the Acaya accident.

Ermi Bengledu – Trade Bank Securities

Okay, so that is $700,000 to $800,000 cost that is going to be reimbursed.

Nigel Lovett

That is correct.

Ermi Bengledu – Trade Bank Securities

I have one more question regarding the exploration activity and the sample permits. I missed the number that you actually expressed; did you say $16 million is going to be the exploration cost of Toreador for 2008?

Nigel Lovett

Not for us, $16 million is the cost to drill this well, drill, case, perforate, stimulate, test this well. We are estimating between $16 million and $17 million and this will be the cost of this carry by the Farming to earn a 75% interest in that block but we will not pay any portion of that.

Operator

Management, there are no further questions. Please continue with any closing remarks.

Nigel Lovett

Okay, we have no closing remarks other than to say thank you for those who have attended and participated on this call and to confirm that we are here. We are alive, we are well, we are happy to answer questions. As you know, we are not actively attending investor road shows and conferences. We feel we are better served by trying go perform rather preach. So again, thank you for your participation.

Operator

Ladies and gentlemen, this concludes the Toreador Research Corporation’s Fourth Quarter Earnings Conference Call. If you would like listen to our replay of today’s conference please dial 303-390-3000 or internationally, 1-800-405-2236, entering pass code 11110109.

(Operator Instructions)

ACT would like to thank you for your participation, you may now disconnect have a pleasant day.

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Source: Toreador Resources Corp. Q4 2007 Earnings Call Transcript
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