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Shell, BP and Statoil Pursue Toreador Resources

The New York Times

Big Oil Pursues Toreador Resources

Wednesday January 20, 2010

Several big energy conglomerates are in initial discussions to buy or partner with Toreador Resources Corporation, an independent oil and natural gas company that operates primarily in France, people briefed on the matter told DealBook.

Three big companies — Royal Dutch Shell plc, BP plc and Statoil ASA — have signed confidentiality agreements with Toreador and concluded technical due diligence on the firm’s oil properties, these people said. Toreador currently has a market value of roughly $200 million.

Representatives of Toreador and one of the three energy companies are in New York this week for meetings about how to structure a possible deal, these people said, but declined to provide the name of the company. Total S.A., the giant Spanish energy company, has also conducted initial due diligence on Toreador but has backed away for now, these people said.

In November, Toreador said it would explore strategic alternatives, including raising capital through equity or debt offerings, and a possible partnership in its primary asset, the Paris Basin oil shale. The company’s property on the Paris Basin is estimated to hold about 30 billion barrels of oil. Toreador hopes to begin drilling there by the third quarter this year.

Toreador said at the time that it had set up a special board panel and hired RBC Capital Markets as its financial advisor. The company has decided to shelve plans for a debt or equity offering and has leaned toward a joint-venture or a full merger, sources said.

Last year, Toreador took steps to strengthen its liquidity including, reducing debt, lowering costs, and selling its Turkish and Hungarian operations to focus on exploration of its French acreage. At the time, Toreador cautioned that there are no guarantees that the talks will result in any changes.

A spokesman for the company declined to comment.

– Zachery Kouwe

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