Toreador is listed on the NASDAQ (ticker: TRGL) and is largely owned by institutional investors (over 60%), with no single institution holding a stake greater than 13%. Toreador’s management and directors also hold a material stake of about 30%.

The total project cost is estimated at $150 million. IFC’s proposed investment is expected to be up to $50 million. The company plans to finance the remainder of its funding requirements through internal cash generation. IFC’s funding is expected to carry a tenor of up to 9 years.

50.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

* These investment figures are indicative

The project activities shall be undertaken in one or more of the following listed locations in Turkey and Romania:

- the South Akcakoca Sub-Basin in the Western Black Sea, offshore Akcakoca, Turkey - offshore natural gas production and onshore treatment facilities;
- the Cendere field in onshore south central Turkey – onshore oil production facilities;
- Thrace Black Sea between Bulgarian waters and the Bosporus Straits – offshore natural gas exploration;
- Central Black Sea in offshore central Turkey – offshore natural gas exploration;
- Eastern Black Sea in the coastal waters to the northwest of the city of Trabzon – offshore natural gas exploration;
- Calgan block in south central Turkey – onshore oil exploration;
- Southeast Turkey located southeast of the Calgan permit – onshore oil exploration;
- Fauresti field in south central Romania, approx. 150 kilometers west of Bucharest – onshore gas field rehabilitation and production;
- Viperesti block located in the foothills of the Carpathian mountains in southeast Romania – onshore oil exploration; and
- Moinesti block in east central Romania, approx. 200 kilometers north of Bucharest – onshore oil exploration.

The company maintains corporate offices in Ankara (Turkey), Bucharest (Romania), Budapest (Hungary), and Paris (France) as well as project offices at its exploration and production sites. Its global headquarters are in Dallas, Texas, USA.


Enhancing Availability of More Efficient and Cleaner Fuel:

The project will support the development of and exploration for primarily natural gas reserves in Turkey and Romania. The increased availability of natural gas in both countries is expected to promote the use of a cleaner and more efficient fuel.

Increased Supply of Domestic Sources of Energy:

The project will increase Turkey and Romania’s supply of domestic sources of energy. Moreover, with the Company’s secondary recovery activities in Romania, the project will improve resource utilization of smaller mature fields which have no interest for the larger players.

Benefits to the Governments:

It is expected that the governments of Turkey and Romania will receive fiscal receipts from royalties, production sharing and/or corporate taxes, generated by the production to be achieved by the proposed investment.

Promoting Competition and Attracting Foreign Direct Investment in the Upstream Sector:

The project promotes competition in the oil & gas sector through the growth of a small independent player, particularly in Turkey, where the sector is dominated by the state-owned enterprises. The participation of smaller companies is important to the oil and gas sector, as they can develop reserves too small to be of interest to larger independents and the majors, and thus help improve production and recovery rates. If successful, the project would demonstrate the viability of investment by small independents in the upstream sectors in Turkey and Romania.

Creation and Preservation of Direct and Indirect Employment:

In 2005, Toreador employed directly 43 nationals in Turkey and Romania and provided indirect employment for another 14 national consultants. The development of the fields will generate a significant number of new jobs especially during the construction period, benefiting the local community through increased employment opportunities both directly and indirectly.

The key development indicators that are proposed to be monitored during the life of the IFC investment are as follows:

- fiscal payments accruing to the governments of Turkey and Romania;
- value of contracts with local suppliers; and
- direct employment levels.

Through this project, IFC is promoting the production of natural gas, in line with the recommendations of the Extractive Industries Review. Roles that IFC will play include:

Long Term Funding: IFC’s proposed investment will help Toreador optimize its capital structure by providing it with a longer tenor (of up to 9 years) than is currently available to it from commercial banks.

Environmental & Social Management System: The Company’s environmental practices are currently geared towards complying with the local legislation and regulatory guidelines in the countries where it operates. As part of this transaction, Toreador has expressed an interest in IFC''s expertise for the development of an Integrated Environment, Health, Safety and Social Management System. The Integrated Management System will provide the Company with a tool to manage their projects in Turkey, Romania and other countries with the same level of standards, in compliance with IFC''s Performance Standards, and international best practices for the oil and gas industry.

Through the implementation of the Integrated Management System the Company will also be able to, provide environment, health, safety and social training for its employees as well as its direct contractors, minimize occupational risks, record and monitor public consultations and disclosure. In addition, as part of the IFC transaction, the Company will be able to develop a Community Development Plan in consultation with stakeholders."

Expertise in Emerging Markets: Toreador is a junior oil and gas company which has historically sourced most of its production in France. Going forward, it is looking to expand in developing countries, like Turkey and Romania, where it has relatively less experience. Accordingly, IFC is viewed by client as a preferred partner of choice because of its global expertise in the sector, together with its in-depth knowledge of local conditions.

Fit with the WBG Strategy

The WBG strategic objective is to help Turkey implement fundamental reforms to reduce economic vulnerability and achieve high and stable growth, and continue the process of addressing long neglected social and environmental problems. The current Country Assistance Strategy aims at reducing the risk of re-emergence of a crisis and helping Turkey address the many challenges of preparing for EU membership. IFC’s strategy fully supports the strategic objectives of the WBG in Turkey to reduce economic vulnerability and achieve high and stable growth through private sector development in the financial sector, corporate sector, infrastructure, and health and education.

The new Romania Country Partnership Strategy (CPS) aims to support Romania in its efforts to integrate with the EU. The CPS has three pillars:

- completing structural and institutional reforms to support sustainable growth;
- addressing fiscal vulnerabilities and modernizing the public sector; and
- targeting poverty reduction and promoting social inclusion.

IFC strategy in Romania is to complement the World Bank’s efforts in private sector development which include:

- promoting PPPs and providing political risk mitigation through equity participation in the privatization of infrastructure sector;
- introducing new financial products and services;
- helping stimulate the growth of the private healthcare sector, as well as support the delivery of higher quality and reach of services; and
- continuing to support commercially productive enterprises in Romania with strong foreign exchange earnings and employment opportunities, and help with cross-border investments.

The project is consistent with the World Bank Group’s overall strategic priorities in these countries by increasing the supply of domestic sources of energy, promoting private sector development by supporting a private independent player in the energy space, and increasing government revenue which could be used for the delivery of services including education and healthcare.

The review of this project consisted of a site visit and appraisal of technical, environmental and social information in the course of appraising the Turkey and Romania operations. The following corporate systems and potential environment, health, safety and social impacts of the project were analyzed:

- Establishment of an integrated Environmental, Health, Safety and Social Management System at the corporate level, as well as specific systems in Turkey and Romania;
- The company’s capacity to manage multiple projects and implement the Integrated Management System;
- Impacts from exploration and construction, including transportation of materials;
- Air emissions;
- Water supply and disposal;
- Liquid and solid waste disposal;
- Noise from drilling operations;
- Public and worker safety;
- Emergency response plans;
- Land acquisition and compensation process;
- Community relations including consultation and disclosure;
- Cultural resources management and chance finds procedures; and
- Community development.

Performance Standards (PS) applicable to this investment include:

- PS1: Social and Environmental Assessment and Management Systems
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement
- PS4: Community Health, Safety and Security
- PS5: Land Acquisition and Involuntary Resettlement
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management
- PS7: Indigenous People
- PS8: Cultural Heritage.

The benefits of this project come in a number of forms as outlined above, including revenues to the governments of Turkey and Romania in the form of corporate taxes (33% in Turkey and 16% in Romania) and royalties (12.5% of production in Turkey and 7.5% in Romania). In coming to a view of whether to support this project, IFC considered the value of the project’s benefits, and governance and other risks to these benefits. It considered a range of governance assessment methodologies, including but not limited to Transparency International’s Corruption Perceptions Index and the World Bank Institute’s Governance Indicators, as well as the current relationship between the host countries and the World Bank Group. The World Bank has helped Turkey enhance governance and improve the transparency and comprehensiveness of its budget, and will continue to engage with the government in this area. In Romania, a key focus of the World Bank has been structural and institutional reforms to support sustainable growth, to be accomplished by reforming the civil service, improving public expenditure management and accountability, implementing the anticorruption strategy, and reforming the judiciary.