Nov 11 - Third Quarter 2011 Financial Results

Source Company Website
Company Toreador Resources Corporation 
Tags Financial & Operating Data
Date November 09, 2011

Toreador Resources Corporation announced third quarter 2011 financial results.

  • Year to date Revenue for the nine months ended September 30, 2011 of $28M (resulting from $25.1M in oil sales and $2.9M of Other Operating Income) compared to revenue of $33M for the same period last year.
  • Third Quarter 2011 Revenue of $8.4M (resulting from $8.3M in oil sales and $0.1M of Other Operating Income) compared to revenue of $6.6M in the third quarter 2010.
  • Production for the nine months ended September 30, 2011 of 234 MBOE.
  • As of September 30, 2011, cash and cash equivalents (including restricted cash) balance of $7.6M.

Mr. Craig McKenzie, President and CEO of Toreador, said "This was a significant quarter for Toreador, one which will take the company to the next level and lay strong foundations for future growth. For our French operations, we maintained production, contained associated operating costs and benefited from a higher average realized oil price. We also received clarity on the regulatory framework in France that, in effect, allows drilling programs in the Paris Basin to recommence without the use of hydraulic fracturing."

McKenzie continued, "The key event of the quarter was our announced merger with ZaZa Energy. Combining with ZaZa gives our stockholders significant and immediate exposure to a fast-growing set of assets in the Texas Eagle Ford. We believe all our stakeholders recognize the compelling opportunity that this combination creates. Upon completion of the transaction, we expect to build a transatlantic, resource-focused exploration and production company with a unique presence in two world class resource basins."

Three Months Ended                     
          September 30,        Change        Change 
($ millions, except where noted)          2011        2010        (units)        (%) 
Revenue and other income          8.4          6.6          1.9            28 
Sale and other operating revenue          8.3          6.0          2.5            39 
Other income          0.1          0.6          (0.5          -89 
Operating (loss) income          (1.4        0.6          (2.1          -288 
Loss from discontinued operations          (0.1        (0.3        0.2            -58 
(Loss) available to common shares          (2.8        (2.9        0.1            -3 
Basic income (loss) per share ($/share) - Cont.
 Ops 
        (0.10        (0.11        0.01            -9 
Diluted income (loss) per share ($/share) -
 Cont. Ops 
        (0.10        (0.11        0.01            -9 
Capital expenditures          0.05          0.03          0.02            67 
Production (MBbl)            78.08            80.69            (2.62          -3 
Average realized price ($/Bbl)          107.1          77.7          29.4            38 

Revenue

Sales and other operating revenue

Sales and other operating revenue for the three months ended September 30, 2011 was $8.4 million, as compared to sales and other operating revenue of $6.0 million for the three months ended September 30, 2010. This increase is primarily due to the rise in global oil prices over the period, which led to an increase in the prices at which Toreador sell their oil from an average of $77.67 per barrel in the three months ended September 30, 2010 to an average of $107.11 per barrel in the three months ended September 30, 2011. This increase was offset by a slightly lower production, decreasing from 81 MBbls in the three months ended September 30, 2010 to 78 MBbls in the three months ended September 30, 2011.

Other income

Other income includes all exploration, salary and general and administrative costs associated with TEF's activities as operator of the exploration permits in the Paris Basin, which TEF is entitled to invoice to Hess under the Investment Agreement. For the three months ended September 30, 2011, $0.1 million was invoiced to Hess and recorded as "Other income" compared to $0.6 million in the same period last year, this decrease being due to reduced activity of the Company as operator of the exploration permits.

Operating costs and expenses

Lease operating expense

Lease operating expense was $2.4 million, or $30.97 per BOE produced, for the three months ended September 30, 2011, as compared to $3.0 million, or $36.76 per BOE produced, for the three months ended September 30, 2010. This decrease is due to a reduction of certain production costs associated with Toreador's conventional production compared to the same period last year, in particular Paris headquarter costs as well as higher repair and maintenance costs incurred last year. Lease operating expense for the three months ended September 30, 2011 also includes inventory turnover variation in an amount of $27,000.

Exploration expense

Exploration expense for the three months ended September 30, 2011 was $96,000, as compared to $201,000 for the three months ended September 30, 2010. This decrease is due primarily to the higher expenses the Company incurred in the same period last year associated with geological and technical studies in connection with Toreador's proof of concept project.

Depreciation, depletion and amortization

Depreciation, depletion and amortization for the three months ended September 30, 2011 was $1.6 million or $20.52 per BOE produced, as compared to $1.1 million or $14.00 per BOE produced for the three months ended September 30, 2010. This increase is primarily due to the reduction at the end of 2010 of the estimated life of wells used for the depreciation, depletion and amortization to comply with the legal maturity of production concessions.

Accretion on discounted assets and liabilities

The accretion expense is composed of asset retirement obligation expense. Accretion expense was $139,000 for the three months ended September 30, 2011 as compared to $246,000 (positive impact) for the three months ended September 30, 2010. This reduction in expense is due to an update of asset retirement obligations at the end of 2010 and higher retirement cost estimates as well as a change of presentation of the accretion on convertible notes which was included in this account during the same period last year and has now been reclassified to Interest Expense.

General and administrative before stock compensation expense

General and administrative expense, excluding stock compensation expense, for the three months ended September 30, 2011 totaled $5.4 million, as compared to $1.3 million for the comparable period in 2010. This increase is due to fees to advisors and counsels incurred in connection with the contemplated merger with Zaza Energy LLC., including $380,000 for communication advisors, $2.2 million for lawyers, $240,000 for auditors and $850,000 for financial advisor, or an aggregate amount of $3.7 million.

Stock compensation expense

Stock compensation expense was $0.6 million for the three months ended September 30, 2011 compared with $0.4 million for the three months ended September 30, 2010. During the three months ended September 30, 2011, no shares were issued compared to 67,187 shares in the comparable period last year.

Impairment of oil properties

There were no impairment charges for the three months ended September 30, 2011 and September 30, 2010.

Loss/Gain on oil derivative contracts

We recorded a gain on oil derivative contracts for the three months ended September 30, 2011 of $515,000 as compared to a loss of $105,000 in the three months ended September 30, 2010. This amount consists of an unrealized gain on the commodity derivative contracts with Vitol S.A as well as the margin calls related to this contract due to the Dated Brent price being higher than the selling price of $91.00 per barrel under the derivative contract. The unrealized gain on the oil derivative contract for the three months ended September 30, 2011 amounted to a gain of $1.5 million compared to a loss of 105,000 for the same period last year. The margin calls for the three months ended September 30, 2011 amounted to an expense of $1 million.

Foreign currency exchange gain (loss)

We recorded a loss on foreign currency exchange of $0.2 million for the three months ended September 30, 2011 compared with a loss of $1.2 million for the three months ended September 30, 2010. The reduction of the foreign exchange loss mainly is a result of Toreador Energy France booking a loss on foreign currency exchange in its statutory accounts in Euro at the end of the second quarter 2010 due to the receipt of the upfront payment from Hess under the Hess Investment Agreement.

Interest expense

Interest expense, was $0.4 million for the three months ended September 30, 2011 as compared to $2.7 million for the three months ended September 30, 2010.

The interest expense relates to interest payments relating to the New Convertible Senior Notes issued in February 2010. Interest expense was $554,000 for the three months ended September 30, 2011 and related to the New Convertible Senior Notes as compared to $1.0 million for the three months ended September 30, 2010 related to both the New Convertible Senior Notes and the 5.00% Convertible Senior Notes. Also included in interest expense are expenses related to the amortization of issue premium and debt issuance costs associated to the New Convertible Senior Notes of $139,000 recorded for the three months ended September 30, 2011 compared to $1.3 million for the three months ended September 30, 2010. This was offset by a positive accretion impact of $255,000 related to the fair value of the New Convertible Senior Notes.

The decrease in interest expense for the third quarter of 2011 compared to the same period of 2010 is explained by the recording for the three months ended September 30, 2010 of (i) amortization expense of $1.3 million due to the change in estimate of the lives of the issue premium and debt issuance costs associated to 5.00% Convertible Senior Notes and to the New Convertible Senior Notes and (ii) $404,000 interest expense relating to 5.00% Convertible Senior Notes.

Income tax (benefit) provision

An income tax provision of $ 711,000 was recorded in the three months ended September 30, 2011, compared to a tax benefit of $ (666,000) recognized for the three months ended September 30, 2010, this increase being due to the fact that an excess of provision for income tax payable in France was recorded in the second quarter of 2010.

Discontinued operations

We recorded in discontinued operations for the nine months ended September 30, 2011 and 2010 a loss of $3,203,000 and a loss of $1,113,000 respectively. This increase is mainly due to the settlement payment for an amount of $3.8 million on June 22, 2011, related to a settlement agreement with Mr. Hunnisett and Mr. Barker in which they agreed to release both Toreador and Tiway Turkey Limited from all current and future claims related to the Overriding Royalty, including the Netherby Payment Amount. The $3.8 million settlement amount was partially offset by a provision release booked in prior periods for this matter in an amount of $900,000. Sales and other operating revenue from discontinued operations for the nine months ended September 30, 2011 amounted to $38,000.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd