Toreador Resources Corp., Dallas, primarily sees itself as a manager of its portfolio of 1.4 million net mineral acres in the US, although it envisions expanding its exploration program overseas.
The current makeup of the Toreador board and management team stems from a strategic restructuring in 1997-98. Thereafter, Toreador has spent almost $30 million in a 2-year period on four separate transactions.
"In a lot of ways, 1999 was really the first full year of business for this new management team," said Thomas Graves, president and CEO. "The strategy that we laid out for our board was to be an acquirer, to build a base, to become an explorerellipse.We're now at the point, where subject to rig availability, we are in the exploration phase."
A public company since the early 1950s, Toreador started out as Toreador Royalty Corp., a royalty company with properties from the Matador Land & Cattle Co., a Texas ranch. Although a royalty company, Toreador was never a royalty trust, Graves emphasized.
Acquisitions, strategy
Under the new management team, Toreador made core acquisitions that are now spinning off enough cash flow to enable the company to grow with the drillbit, Douglas Weir, vice-president, finance, and treasurer, said.
"We want to have a 40-50% increase in earnings per share in 2002," Weir said. He said that a strong hike in earnings per share during 2000 stemmed from acquisitions and from strong commodity prices.
In December 1998, Toreador closed a $13 million acquisition from the Federal Land Bank. "It was a little over 800,000 net mineral acres in every county in Mississippi and Alabama and most parishes in Louisiana," Graves said.
In September 1999, Toreador closed on various mineral and royalty interests acquired from Conoco Inc. The properties are in Arkansas, California, Kansas, and Michigan. In December 1999, Toreador bought 50% of Lario Oil & Gas Co.'s interest in multiple producing fields in Finney County, Kan., for $5.5 million
In September 2000, Toreador obtained the outstanding stock of Texona Petroleum Corp. to obtain 1,000 wells scattered across 12 states but primarily in Oklahoma, Texas, and Louisiana.
Toreador also is disposing of its nonessential assets during 2001. As of June 30, 2001, it had closed property sales totaling $551,000.
Core areas, assets
Toreador operations are concentrated in the US, but the company is looking for acquisitions overseas, Graves said.
Currently, Toreador has three core areas: East Texas; the southeastern US, which it defines as Alabama, Mississippi, and Louisiana; and the Sacramento basin of California. Toreador is developing a fourth core area in the Gulf of Mexico.
"We are focusing on East Texas andellipseGulf of Mexico on an exploration perspective, simultaneously. The Sacramento basin in California is a seasonal sort of project. Mississippi and Alabama seem to be more cyclical," Graves said.
As of July 1, 2001, Toreador's asset base was 53% gas and 47% oil.
"More importantly than that, we are about 45% royalty and 55% working interest," Weir said. The mineral and royalty income helps provides stability from commodity price swings, he said.
"Basically, our philosophy was that we wanted to have a strong base that wasn't quite as volatile, so we could have a strong base of cash flow to support our drilling programs," Weir said.
Toreador's focus is on expanding exploration opportunities, principally in East Texas and Gulf of Mexico, Graves said, adding that he also is interested in opportunities outside of the US, particularly in Western Europe.
He declined to elaborate upon specifics beyond that, saying he has a bias toward non-US holdings because he formerly worked for Triton Energy Corp., now Triton Energy Ltd., an international oil and gas exploration and production company.
"We would expect any non-US part of our business to be as important as the domestic side. We see a situation where the two could be very supportive of each other," Graves said.
Toreador Resources Corp.
Pres. and CEO Thomas Graves
"We would expect any non-US part of our business to be as important as the domestic side. We see a situation where the two could be very supportive of each other."
