Toreador has announced a cohesive plan to turnaround the Company that includes cutting overhead, divesting non-core assets, reducing debt, and improving its core operations in France and Hungary.
Following the recent settlement with Toreador shareholder Nanes Balkany Partners LLC on January 23, 2009, the Board of Directors has undertaken an immediate two-step initiative to: 1) create a new corporate platform that focuses on immediately improving operational and financial performance, and 2) develop a new 3-year strategic plan that will be rolled out no later than the annual shareholder meeting on June 4, 2009.
CEO Mr. McKenzie said, "We are sharply reducing our overhead to match the scale of the business by consolidating our offices and relocating our headquarters to Paris by mid-year. It is a first step to enhance shareholder value."
Mr. McKenzie continued, "Toreador is also conducting the sale of certain non-core assets and proceeds will be used to pay down debt. Our 2009 capital program has been cut to cover minimum commitments while the sale processes move forward and we more fully assess the growth potential of our assets in France and Hungary."
A New Corporate Platform
The Platform is a direct response to the current credit and equity markets and sharply reduced commodity prices. The Company is facing significant near-term debt obligations with net debt, minus cash, of approximately $97 million and current commodity prices are less than half that of 2008 levels.
Under the new corporate platform the Company will take the following proactive steps:
- The $55 million sale of a 26.75% interest in the South Akcakoca Sub-Basin (SASB) to Petrol Ofisi (announced on February 3, 2009) is anticipated to close next week;
- The Company has retained Stellar Energy Advisors, based in London, UK, to manage an open bid process to sell its remaining 10% interest in the SASB, in addition to its onshore production, and 2.916 million net acres in exploration licenses that are currently held (as of 1/1/09) and 1.085 million net acres that are pending approvals;
- Per the covenants of the International Finance Corporation revolving credit facility, proceeds of the Petrol Ofisi sale will be used to fully repay the outstanding balance. That facility will be concluded as a result;
- A share buyback program has been adopted by the Board of Directors for the repurchase of up to 1 million common shares of Toreador that may be executed at any time over the next 12 months assuming that the sale to Petrol Ofisi is completed;
- Assuming that the sale to Petrol Ofisi is completed, the Company intends to continue taking advantage of the current market to buy back a portion of convertible bonds;
- Notwithstanding that the Company is incorporated in Delaware and listed on the NASDAQ, its operations are located in Europe. With its current headquarters in Dallas costing over $7 million a year in overhead, there is considerable room to improve efficiency and integrate activities across the Company. The Company expects to have completed moving its headquarters to its Paris office by July 2009, reducing its US presence to focus only on securities exchange requirements and investor relations;
- The Company is currently drilling a high-impact exploration well on the Tompa Block in Hungary, announced on February 9, 2009. Results are expected by early second quarter 2009 and the Company plans to continue with its efforts to establish a strong presence in Hungary;
- 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 (100% owned and operated) is now underway. The results of the study will be launched as part of the 3-year strategic plan.
Mr. McKenzie concluded, "This year we will focus on what we can control and build credibility through delivery of our 2009 Platform priorities and development of a 3-year strategic plan. With the full support of the Board of Directors, we are drastically reshaping the way this Company is managed so that shareholders will have the ability to benchmark both our progress and our commitment to creating superior shareholder returns."