T-REX OIL, INC. - Quarter Report: 2007 December (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2007

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ___________________

Commission file number: 000-51425

Rancher Energy Corp.

(Exact name of registrant as specified in its charter)

Nevada	98-0422451
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

999 - 18 ^th Street, Suite 3400

Denver, Colorado 80202

(Address of principal executive offices)

(303) 629-1125

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer x Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of February 8, 2008, 114,437,956 shares of Rancher Energy Corp. common stock, $.00001 par value, were outstanding.

Rancher Energy Corp.

Table of Contents

PART I - FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements

	Consolidated Balance Sheets as of December 31, 2007 and March 31, 2007	2

	Consolidated Statements of Operations for the Three and Nine Months ended December 31, 2007 and 2006	4

	Consolidated Statement of Changes in Stockholders’ Equity as of December 31, 2007	5

	Consolidated Statements of Cash Flows for the Nine Months ended December 31, 2007 and 2006	6

	Notes to Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 6.	Exhibits	28

SIGNATURES		31

Part I. Financial Information

Item 1. Financial Statements

Rancher Energy Corp.

Consolidated Balance Sheets

		December 31, 2007			March 31, 2007 (Unaudited)

ASSETS

Current assets:
Cash and cash equivalents	$	10,253,091		$	5,129,883
Accounts receivable		780,079			453,709
Prepaid expenses		690,317			-
Total current assets		11,723,487			5,583,592

Oil & gas properties at cost (successful efforts method):
Unproved		53,870,386			56,079,133
Proved		18,081,265			18,552,188
Less: Accumulated depletion, depreciation and amortization		(1,249,879	)		(347,821	)
Net oil & gas properties		70,701,772			74,283,500

Other assets:
Other assets, net of accumulated depreciation of $156,290 and $27,880, respectively		2,655,494			1,610,939

Total assets	$	85,080,753		$	81,478,031

The accompanying notes are an integral part of these financial statements.

Rancher Energy Corp.

Consolidated Balance Sheets

		December 31, 2007 (Unaudited)			March 31, 2007
LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable and accrued liabilities		1,977,037			1,542,840
Accrued oil & gas property costs		-			250,000
Asset retirement obligation		564,308			196,000
Note payable, net of unamortized discount of $3,598,545		8,641,455			-
Liquidated damages pursuant to registration rights arrangements		-			2,705,531
Derivative liability		394,286			-
Total current liabilities		11,577,086			4,694,371

Long-term liabilities:
Derivative liability		209,134			-
Asset retirement obligation		705,328			1,025,567
Total long-term liabilities		914,462			1,025,567

Commitments and contingencies:		-			-

Stockholders’ equity:
Common stock, $0.00001 par value, 275,000,000 shares authorized, 114,437,956 and 102,041,432 shares issued and outstanding at December 31, 2007 and March 31, 2007, respectively		1,145			1,021

Additional paid-in capital		91,529,215			84,985,934

Accumulated deficit		(18,941,155	)		(9,228,862	)

Total stockholders’ equity		72,589,205			75,758,093

Total liabilities and stockholders’ equity	$	85,080,753		$	81,478,031

The accompanying notes are an integral part of these financial statements.

Rancher Energy Corp.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended December 31,						Nine Months Ended December 31,
	2007			2006			2007			2006
Revenues:
Oil & gas sales	1,704,267		$	105,416		$	$4,685,373		$	105,416
Losses on derivative activities	(636,109	)					(636,109	)
Total revenues	1,068,158			105,416			4,049,264			105,416
Operating expenses:
Production taxes	207,588			11,192			570,239			11,192
Lease operating expenses	808,091			73,725			2,087,753			73,725
Depreciation, depletion, amortization and accretion	319,391			37,155			1,097,255			37,155
Impairment	-			4,681			-			385,526
Exploration expense	55,945			220,191			186,772			235,131
General and administrative	1,735,482			1,200,405			5,788,574			2,166,687
Total operating expenses	3,126,497			1,547,349			9,730,593			2,909,416

Loss from operations	(2,058,339	)		(1,441,933	)		(5,681,329	)		(2,804,000	)

Other income (expense):

Liquidated damages pursuant to registration rights arrangement		-			-		$	(2,645,393	)		-
Interest and other income		95,982			71,262			169,846			94,747
Interest expense and financing costs		(1,342,984	)		-			(1,555,417	)		(33,000	)

Total other income (expense)		(1,247,002	)		71,262			(4,030,964	)		61,747

Net loss	$	(3,305,341	)	$	(1,370,671	)	$	(9,712,293	)	$	(2,742,253	)

Basic and diluted net loss per share	$	(0.03	)	$	(0.03	)	$	(0.09	)	$	(0.07	)

Basic and diluted weighted average shares outstanding		113,471,032			53,933,905			108,425,299			40,227,219

The accompanying notes are an integral part of these financial statements.

Rancher Energy Corp.

Consolidated Statement of Changes in Stockholders’ Equity

(Unaudited)

	Shares		Amount		Additional Paid- In Capital		Accumulated Deficit		Total Stockholders’ Equity

Balance, April 1, 2007	102,041,432	$	1,021	$	84,985,934	$	(9,228,862)	$	75,758,093

Liquidated damages and imputed interest pursuant to registration rights arrangement, settled in shares	9,731,569		97		5,463,315		-		5,463,412

Stock issued upon exercise of stock options	1,500,000		15		-		-		15

Restricted stock awards	500,000		5		180,945		-		180,950

Common stock exchanged for services - non-employee directors	557,812		6		222,744			-	222,750

Common stock exchanged for services - non-employee	107,143		1		112,499			-	112,500

Stock-based compensation	-		-		864,143		-		864,143

Offering costs	-		-		(300,365)		-		(300,365)

Net loss			-				(9,712,293)		(9,712,293)

Balance, December 31, 2007	114,437,956	$	1,145	$	91,529,215	$	(18,941,155)	$	72,589,205

The accompanying notes are an integral part of these financial statements.

Rancher Energy Corp.

Consolidated Statements of Cash Flows

(Unaudited)

		Nine Months Ended December 31,
		2007			2006
Cash flows from operating activities:
Net loss	$	(9,712,293	)	$	(2,742,253	)
Adjustments to reconcile net loss to cash used for operating activities:
Depreciation, depletion, amortization and accretion		1,097,255			37,155
Impairment of unproved properties		-			385,526
Liquidated damages pursuant to registration rights arrangement		2,645,393			-
Imputed interest expense		112,489			33,453
Amortization of deferred financing costs and discount on note payable		1,132,050			-
Unrealized losses on derivative activities		578,435			-
Stock-based compensation expense		864,143			1,020,739
Restricted stock compensation expense		180,950			-
Services exchanged for common stock - non-employee directors		222,750			-
Services exchanged for common stock - non-employee		112,500			-
Changes in operating assets and liabilities:
Settlement of asset retirement obligation		(18,318	)		-
Accounts receivable		(260,853)			(94,727)
Prepaid expenses		(560,321)			-
Other assets		-			(42.352)
Accounts payable and accrued liabilities		45,758			382,260
Net cash used for operating activities		(3,560,062	)		(1,020,199)

Cash flows from investing activities:
Capital expenditures for oil & gas properties		(2,087,871	)		(50,524,058	)
Proceeds from conveyance of unproved oil & gas properties		491,500			-
Increase in other assets		(797,432	)		(124,843	)
Net cash used for investing activities		(2,393,803	)		(50,648,901	)

Cash flows from financing activities:
Payment of deferred financing costs		(862,577	)		-
Proceeds from issuance of convertible notes payable		-			8,112,862
Proceeds from borrowings		12,240,000			-
Payments of convertible notes payable		-			-
Proceeds from notes payable converted to common stock		-			500,000
Proceeds from sale of common stock and warrants		-			74,937,508
Proceeds from issuance of common stock upon exercise of stock options		15			-
Payment of offering costs		(300,365)			-
Net cash provided by financing activities		11,077,073			83,550,370

Increase in cash and cash equivalents		5,123,208			31,881,270
Cash and cash equivalents, beginning of period		5,129,883			46,081

Cash and cash equivalents, end of period	$	10,253,091		$	31,927,351

Rancher Energy Corp.

Consolidated Statements of Cash Flows

(Unaudited)

		Nine Months Ended December 31,
		2007		2006
Non-cash investing and financing activities:
Payables for purchase of oil & gas properties	$	118,023	$	500,000
Asset retirement asset and obligation	$	18,473	$	901,458
Value of warrants issued in connection with acquisition of South Cole Creek and South Glenrock B Fields	$	-	$	616,140
Common stock and warrants issued on conversion of notes payable	$	-	$	503,453
Common stock issued on payment of liquidated damages pursuant to registrations rights arrangement	$	5,463,412	$	-
Conveyance of overiding royality interest in financing transaction	$	4,500,000	$	-

Rancher Energy Corp.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1—Organization and Summary of Significant Accounting Policies

Organization

Rancher Energy Corp. (“Rancher Energy” or the “Company”) was incorporated in Nevada on February 4, 2004. The Company acquires, explores for, develops and produces oil and natural gas, concentrating on applying secondary and tertiary recovery technology to older, historically productive fields in North America.

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of the Company’s wholly owned subsidiary, Rancher Energy Wyoming, LLC, a Wyoming limited liability company that was formed on April 24, 2007. In management’s opinion, the Company has made all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of financial position, results of operations, and cash flows. The consolidated financial statements should be read in conjunction with financial statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2007. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to financial statements included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2007. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.

Other Significant Accounting Policies

The accounting policies followed by the Company are set forth in Note 1 to the consolidated financial statements included in its Annual Report on Form 10-K for the year ended March 31, 2007, and are supplemented in the Notes to Consolidated Financial Statements in this Quarterly Report on Form 10-Q for the nine months ended December 31, 2007. These unaudited consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes included in the Annual Report on Form 10-K for the year ended March 31, 2007. As a result on transactions entered into since the filing of the Company’s Annual Report on Form 10-K. the following significant accounting policies have been implemented.

Deferred Financing Costs

The Company capitalizes costs incurred in connection with borrowings or establishment of credit facilities. These costs are amortized as an adjustment to interest expense over the life of the borrowing or life of the credit facility.

Commodity Derivatives

The Company accounts for derivative instruments or hedging activities under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 133 requires the Company to record derivative instruments at their fair value. The Company’s risk management strategy is to enter into commodity derivatives that set “price floors” and “price ceilings” for its crude oil production. The objective is to reduce the Company’s exposure to commodity price risk associated with expected crude oil production.

The Company does not hold or issue commodity derivatives for speculative or trading purposes. The Company is exposed to credit losses in the event of nonperformance by the counterparty to its commodity derivatives. It is anticipated, however, that its counterparty will be able to fully satisfy its obligations under the commodity derivatives contracts. The Company does not obtain collateral or other security to support its commodity derivatives contracts subject to credit risk but does monitor the credit standing of the counterparty. The price we receive for production in our three fields is indexed to Wyoming Sweet crude oil posted price. The Company has not hedged the basis differential between the NYMEX price and the Wyoming Sweet price.

Reclassification .

Certain amounts in the 2006 financial statements have been reclassified to conform to the 2007 financial statement presentation. Such reclassification had no effect on net loss.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157). This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands the disclosures on fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We have not determined the effect, if any, the adoption of this statement will have on our financial position or results of operations.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). This statement permits entities to choose to measure many financial instruments and certain other items at fair value. This statement expands the use of fair value measurement and applies to entities that elect the fair value option. The fair value option established by this Statement permits all entities to choose to measure eligible items at fair value at specified election dates. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We have not determined the effect, if any, the adoption of this statement will have on our financial position or results of operations.

In December 2007, the FASB issued FASB Statement No. 141 (Revised 2007), Business Combination (SFAS 141R). SFAS 141R will significantly change the accounting for business combinations. Under Statement 141R, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions and includes a significant number of new disclosure requirements. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We have not determined the effect, if any, the adoption of this statement will have on our financial position or results of operations.

In December 2007, the FASB issued FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements (SFAS 160). SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. We have not determined the effect, if any, the adoption of this statement will have on our financial position or results of operations.

Net Income (Loss) per Share

Basic net income (loss) per common share of stock is calculated by dividing net income (loss) available to common stockholders by the basic weighted-average of common shares outstanding during each period.

Fully-diluted net income per common share of stock is calculated by dividing adjusted net income by the weighted-average of fully -diluted common shares outstanding, including the effect of other dilutive securities. The Company’s potentially dilutive securities consist of in-the-money outstanding options and warrants to purchase shares of the Company’s common stock. Fully-diluted net loss per common share does not give effect to dilutive securities as their effect would be anti-dilutive. The treasury stock method is used to measure the dilutive impact of stock options and warrants. For the three and nine months ended December 31, 2007, securities totaling 80,473,550 were excluded from fully-diluted weighted average shares outstanding, consisting of 75,960,550 warrants and 4,513,000 options to acquire shares of the Company’s common stock, as their effect would be anti-dilutive.

The following table sets forth the calculation of basic and fully-diluted loss per share:

		For the Three Months Ended December 31,				For the Nine Months Ended December 31,
		2007		2006		2007		2006
Net loss	$	(3,305,341)	$	(1,370,671)	$	(9,712,293)	$	(2,742,253)
Basic weighted-average common shares outstanding		113,471,032		53,933,905		108,425,299		40,277,219
Basic and fully-diluted net loss per common share	$	(0.03)	$	(0.03)	$	(0.09)	$	(0.07)

Note 2—Property Acquisitions

Cole Creek South Field and South Glenrock B Field Acquisitions

On December 22, 2006, the Company acquired certain oil & gas properties including (i) a 100% working interest (79.3% net revenue interest) in the Cole Creek South Field, which is located in Wyoming’s Powder River Basin; and (ii) a 93.6% working interest (74.5% net revenue interest) in the South Glenrock B Field, which is also located in Wyoming’s Powder River Basin.

Big Muddy Field Acquisition

On January 4, 2007, the Company acquired the Big Muddy Field, which is located in the Powder River Basin east of Casper, Wyoming.

Pro Forma Results of Operations

The following table reflects the pro forma results of operations for the three and six months ended December 31, 2006, as though the acquisitions had occurred on April 1, 2006. The pro forma amounts include certain adjustments, including recognition of depreciation, depletion, and amortization based on the allocated purchase price.

The pro forma results do not necessarily reflect the actual results that would have occurred had the acquisitions occurred during the period presented, nor does it necessarily indicate the future results of the Company and the acquisitions.

		Three Months Ended December 31, 2006			Nine Months Ended December 31, 2006
Revenue	$	1,100,169		$	4,500,447
Net loss	$	(1,434,105	)	$	(2,340,433	)
Net loss per basic and fully- diluted share	$	(0.01	)	$	(0.03	)

See Note 9 for discussion of events occurring subsequent to December 31, 2007.

Note 3—Asset Retirement Obligations

The Company recognizes an estimated liability for future costs associated with the abandonment of its oil & gas properties. A liability for the fair value of an asset retirement obligation and a corresponding increase to the carrying value of the related long-lived asset are recorded at the time a well is completed or acquired. The increase in carrying value is included in proved oil & gas properties in the balance sheets. The Company depletes the amount added to proved oil & gas property costs and recognizes accretion expense in connection with the discounted liability over the remaining estimated economic lives of the respective oil & gas properties. Cash paid to settle asset retirement obligations is included in the operating section of the Company’s statements of cash flows.

The Company’s estimated asset retirement obligation liability is based on historical experience in abandoning wells, estimated economic lives, estimates as to the cost to abandon the wells in the future, and federal and state regulatory requirements. The liability is discounted using a credit-adjusted risk-free rate estimated at the time the liability is incurred or revised, as appropriate. The credit-adjusted risk-free rate used to discount the Company’s abandonment liabilities was 13.1%. Revisions to the liability are due to changes in estimated abandonment costs and changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.

The Company did not have any oil & gas properties prior to the Cole Creek South Field, the South Glenrock B Field, and the Big Muddy Field acquisitions in late 2006 and early 2007 discussed in Note 2, Property Acquisitions, and, consequently, did not have any asset retirement obligation liability. The Company recorded no accretion expense during the very brief period it owned the fields in the period ended December 31, 2006. A reconciliation of the Company’s asset retirement obligation liability during the nine months ended December 31 is as follows:

		2007			2006

Balance, April 1	$	1,221,567		$	-
Liabilities incurred					901,458
Liabilities settled		(18,318	)		-
Accretion expense		66,387			-
Balance, December 31	$	1,269,636		$	901,458

Current	$	564,308		$	109,274
Long-term
	$	705,328		$	792,184

Note 4—Income Taxes

As of December 31, 2007, because the Company believes that it is more likely than not that its net deferred tax assets, consisting primarily of net operating losses, will not be utilized in the future, the Company has fully provided for a valuation of its net deferred tax assets.

Effective April 1, 2007, we adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109, which clarifies the financial statement recognition and disclosure requirements for uncertain tax positions taken or expected to be taken in a tax return. Any interest and penalties related to uncertain tax positions are recorded as interest expense and general and administrative expense, respectively. At the time of adoption, there was no impact to the Company’s consolidated financial statements, and as of December 31, 2007, the Company did not have any unrecognized tax benefits, and no interest or penalties related to income tax reporting were reflected in the consolidated balance sheet and statement of operations. We do not expect any material changes to the unrecognized tax positions within the next 12 months.

The Company is subject to United States federal income tax and income tax from multiple state jurisdictions. Currently, the Internal Revenue Service is not reviewing any of the Company’s federal income tax returns, and agencies in states where the Company conducts business are not reviewing any of the Company’s state income tax returns. All tax years remain subject to examination by tax authorities, including for the period from February 4, 2004 through March 31, 2007.

Note 5—Short Term Note Payable

On October 16, 2007, the Company borrowed $12,240,000 pursuant to a Term Credit Agreement with a financial institution (the Lender), resulting in net proceeds of $11,622,800 after the deduction of the Lender’s fees, expenses, and three months of interest to be held in escrow. In addition, the Company incurred approximately $390,000 in investment banking, legal, and other fees and expenses in connection with the transaction. The Company capitalized costs associated with the issuance of the Note Payable as deferred financing costs. Amortization of the deferred financing costs in the amount of $131,342 is included in interest expense for the three and nine months ended December 31, 2007.

All amounts outstanding under the Credit Agreement are due and payable on October 31, 2008 (Maturity Date) and bear interest at a rate equal to the greater of (a) 12% per annum and (b) the one-month LIBOR rate plus 6% per annum. The Company is required to make monthly interest payments on the amounts outstanding under the Credit Agreement, but is not required to make any principal payments until the Maturity Date. The Company may prepay the amounts outstanding under the Credit Agreement at any time without penalty.

The Company’s obligations under the Credit Agreement are collateralized by a first priority security interest in its properties and assets, including all rights under oil & gas leases in its three producing oil fields in the Powder River Basin of Wyoming and all of its equipment on those properties. The Company also granted the Lender a 2% Overriding Royalty Interest (ORRI), proportionally reduced when the Company’s working interest is less than 100%, in all crude oil and natural gas produced from its three Powder River Basin fields. The Company estimates that the fair value of the ORRI granted to the Lender is approximately $4,500,000 and has recorded this amount as a discount to the Note Payable and as a decrease of oil and gas properties. Amortization of the discount based upon the effective interest method in the amount of $901,455 is included in interest expense for the three and nine months ended December 31, 2007. As long as any of its obligations remain outstanding under the Credit Agreement, the Company will be required to grant the same ORRI to the Lender on any new working interests acquired after closing. Prior to the Maturity Date, the Company may re-acquire 50% of the ORRI granted to the Lender at a repurchase price calculated to ensure that total payments by the Company to the Lender of principal, interest, ORRI revenues, and ORRI repurchase price will equal 120% of the loan amount.

The Credit Agreement contains several events of default, including if, at any time after closing, the Company’s most recent reserve report indicates that its projected net revenue attributable to proved reserves is insufficient to fully amortize the amounts outstanding under the Credit Agreement within a 48-month period and it is unable to demonstrate to the Lender’s reasonable satisfaction that it would be able to satisfy such outstanding amounts through a sale of its assets or an sale of equity. Upon the occurrence of an event of default under the Credit Agreement, the Lender may accelerate the Company’s obligations under the Credit Agreement. Upon certain events of bankruptcy, obligations under the Credit Agreement would automatically accelerate. In addition, at any time that an event of default exists under the Credit Agreement, the Company will be required to pay interest on all amounts outstanding under the Credit Agreement at a default rate, which is equal to the then-prevailing interest rate under the Credit Agreement plus four percent per annum.

The Company is subject to various restrictive covenants under the Credit Agreement, including limitations on its ability to sell properties and assets, pay dividends, extend credit, amend material contracts, incur indebtedness, provide guarantees, effect mergers or acquisitions (other than to change its state of incorporation), cancel claims, create liens, create subsidiaries, amend its formation documents, make investments, enter into transactions with its affiliates, and enter into swap agreements. The Company must maintain (a) a current ratio of at least 1.0 (excluding from the calculation of current liabilities any loans outstanding under the Credit Agreement) and (b) a loan-to-value ratio greater than 1.0 to 1.0 for the term of the loan. As of December 31, 2007 and of the date of this Quarterly Report, the Company is in compliance with all covenants under the Credit Agreement.

Note 6—Common Stock

Registration and Other Payment Arrangements

In connection with the sale of certain Units, consisting of common stock and warrants to acquire common stock, the Company entered into agreements that require the transfer of consideration under registration and other payment arrangements, if certain conditions are not met.

Under the terms of the Registration Rights Agreement, the Company was required to pay the holders of the registrable securities issued in the December 2006 and January 2007 equity private placement, liquidated damages if the registration statement that was filed in conjunction with the private placement was not declared effective by the U.S. Securities and Exchange Commission (SEC) within 150 days of the closing of the private placement (December 21, 2006). The liquidated damages were due on or before the day of the failure (May 20, 2007) and every 30 days thereafter, or three business days after the failure is cured, if earlier. The amount due was 1% of the aggregate purchase price, or $794,000 per month. If the Company failed to make the payments timely, interest would accrue at a rate of 1.5% per month. All payments pursuant to the registration rights agreement and the private placement agreement could not exceed 24% of the aggregate purchase price, or $19,057,000 in total. The payment could be made in cash, notes, or shares of common stock, at the Company’s option, as long as the Company did not have an equity condition failure. The equity condition failures are described further below. Pursuant to the terms of the registration rights agreement, when the Company opted to pay the liquidated damages in shares of common stock, the number of shares issued was based on the payment amount of $794,000 divided by 90% of the volume weighted average price of the Company’s common stock for the 10 trading days immediately preceding the payment due date.

The Company’s registration statement was declared effective on October 31, 2007. The following is a summary of payments during the nine months ended December 31, 2007:

Payment Date		90% of Volume Weighted Average Price for 10 Days Preceding Payment	Shares Issued		Closing Price at Payment Date		Value of Shares Issued

May 18, 2007	$	0.85	933,458	$	1.04	$	970,797
June 19, 2007	$	0.84	946,819	$	0.88		833,201
July 19, 2007	$	0.60	1,321,799	$	0.66		872,387
August 17, 2007	$	0.45	1,757,212	$	0.41		720,457
September 17, 2007	$	0.32	2,467,484	$	0.34		838,945
October 17, 2007	$	0.55	1,443,712	$	0.57		822,915
October 31, 2007	$	0.43	861,085	$	0.47		404,710
			9,731,569			$	5,463,412

A reconciliation of the Company’s liquidated damages liability pursuant to registration rights arrangements during the nine months ended December 31, 2007 is as follows:

Balance, April 1, 2007	$	2,705,531

Obligations incurred		2,645,393
Imputed interest expense		112,488
Common stock issued in payment of obligations		(5,463,412	)
Balance, December 31, 2007	$	0

The Registration Rights Agreement requires that the Company must maintain effectiveness of the registration statement, provide the information necessary for sale of shares to be made, register a sufficient number of shares, and maintain the listing of the shares. Lack of compliance requires the Company to pay the holders of the registrable securities liquidated damages under the same terms discussed above. As of the date of this Quarterly Report, the Company has not recorded any liability associated with the requirement to maintain effectiveness of the registration statement.

Failure to maintain the equity conditions, a description of which follows, negates the Company’s ability to settle the liquidated damages, if any, in shares of common stock. The Company must ensure that:

o	Common stock is designated for quotation on OTC Bulletin Board, the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, or the American Stock Exchange;

§	Common stock has not been suspended from trading, other than for two days due to business announcements; and

§	Delisting or suspension has not been threatened, or is not pending.

o	Shares of common stock have been delivered upon conversion of Notes and Warrants on a timely basis;

o	Shares may be issued in full without violating the rules and regulations of the exchange or market upon which they are listed or quoted;

o	Payments have been made within five business days of when due pursuant to the Securities Purchase Agreement, the Convertible Notes, the Registration Rights Agreement, the Transfer Agent Instructions, or the Warrants (Transaction Documents);

o	There has not been a change in control of the company, a merger of the company or an event of default as defined in the Notes; and

o	There is material compliance with the provisions, covenants, representations or warranties of all Transaction Documents.

There is an equity conditions failure if, on any day during the 10 trading days prior to when a registration-delay payment is due, the equity conditions have not been satisfied or waived.

Under the terms of the Securities Purchase Agreement, liquidated damages are due to the holders of the securities if the Company meets the applicable listing requirements on an approved exchange or market but the registrable shares are not listed by December 21, 2007 on an approved exchange or market. The liquidated damages are equal to 0.25% of the aggregate purchase price, or $198,000, payable in cash. The payments are due on the day of the listing failure.

Currently, there are no equity conditions failures and we are not subject to any listing requirements.

Note 7—Share-Based Compensation

Chief Executive Officer (CEO) Options

During the nine months ended December 31, 2007, the Company’s CEO exercised options to acquire 1,500,000 shares of common stock, for a cumulative exercise price of $15.00 ($0.00001/share).

2006 Stock Incentive Plan

During the nine months ended December 31, 2007, options to purchase 40,000, 673,000 and 25,000 shares of common stock were granted to directors, employees and a consultant, respectively. The options granted have exercise prices of $1.02, $0.45 to $1.18 and $1.64, vest over five years, three years and one year, and have a maximum term of ten, five and five years, respectively. The fair value of the options granted was estimated as of the grant date using the Black-Scholes option pricing model with the following assumptions:

Volatility	76.00%
Expected option term	Five to 10 years
Risk-free interest rate	4.63% to 4.68%
Expected dividend yield	0.00%

During the nine months ended December 31, 2007, options to purchase 1,060,000 shares of common stock granted to employees expired. The options had exercise prices of $1.18 to $3.19.

Total estimated unrecognized compensation cost from unvested stock options as of December 31, 2007 was approximately $1,384,839 which the Company expects to recognize over 3.7 years. As of December 31, 2007 there were 3,013,000 options outstanding under the 2006 Stock Incentive Plan and 6,987,000 options are available for issuance.

The expected term of options granted was estimated to be the contractual term. The expected volatility was based on an average of the volatility disclosed by other comparable companies who had similar expected option terms. The risk free rate was based on the five-year and 10-year U.S. Treasury bond rate.

Restricted Stock Award

On April 20, 2007, four new members were appointed to our Board of Directors. Each newly appointed director received a stock grant of 100,000 shares of the Company’s common stock that vests 20% (20,000 shares) on the date of grant with vesting 20% per year thereafter. On May 31, 2007, the remaining independent Board member not covered by the April 20, 2007 award received a stock grant of 100,000 shares of the Company’s common stock that vests 20% (20,000 shares) on the date of grant with vesting 20% per year thereafter.

On May 22, 2007, the Company issued 400,000 shares of common stock to the four new members, and on June 26, 2007, the Company issued 100,000 shares of common stock to the remaining independent Board member. Pursuant to the vesting discussed above, of the total fair market value at the date of grant of $517,000, and for the nine months ended December 31, 2007, $180,950 has been reflected as a charge to general and administrative expense in the statement of operations, with a credit of $5 to common stock and $180,945 to additional paid-in capital.

Common Stock Exchanged for Services

Consulting Agreement

On February 2, 2007, the Company entered into an agreement with an executive search firm to recruit additional members for its Board of Directors. Upon acceptance and retention of the additional directors, the Company could pay a portion of the executive search firm’s services in shares of common stock.

On April 20, 2007, four new members were appointed to the Company’s Board of Directors. On April 23, 2007, the Company and the executive search firm agreed to payment of a portion of services through the issuance of 107,143 shares of common stock at a price of $1.05 per share, the closing price on that date. The stock issuance was authorized by the Board of Directors on June 27, 2007. For the nine months ended December 31, 2007, total compensation of $112,500 has been reflected as a charge to general and administrative expense in the statement of operations, with a corresponding credit to additional paid-in capital.

Board of Director Fees

On April 20, 2007, the Board of Directors approved a resolution whereby members may receive stock in lieu of cash for Board meeting fees, Committee meeting fees and Committee Chairmen fees.

For the three and nine months ended December 31, 2007, board members elected to receive 275,001 and 557,812 shares of common stock, respectively, in lieu of cash, valued at $0.73 to $0.27 per share, the closing price of the Company’s stock on the dates of grant. Total compensation for the three and nine months ended December 31, 2007of $74,250 and $222,750, respectively, has been reflected as a charge to general and administrative expense in the statement of operations, with a corresponding credit to additional paid-in capital.

Note 8—Commodity Derivatives

Under the terms of the Credit Agreement (Note 5), the Company was required to enter into derivatives contracts covering approximately 75% of its proved developed producing reserves scheduled to be produced during a two-year period. The objective is to reduce the Company’s exposure to commodity price risk associated with expected crude oil production.

The Company’s risk management strategy is to enter into commodity derivatives that set “price floors” and “price ceilings” for its crude oil production. On October 16, 2007, the Company entered into a participation cap costless collar with an unrelated counterparty that specifies a price floor of $65 per barrel, indexed to West Texas Intermediate NYMEX (WTI- NYMEX) covering 75% of scheduled production in the next two years, a total of 113,220 barrels; and a WTI- NYMEX price ceiling of $83.50 per barrel covering 45% of scheduled production for two years, a total of 67,935 barrels.

The Company has elected not to designate the commodity derivatives to which they are a party as cash flow hedges, and accordingly, such contracts are recorded at fair value on its consolidated balance sheets and changes in such fair value are recognized in current earnings as income or expense as they occur. As of December 31, 2007, the fair value of the contract with the counterparty was estimated to be $578,435 in a net liability position This amount together with realized losses on settlement of the derivative contract of $57,674 (combined total of $636,109) is reflected as losses from risk management activities on the consolidated statements of operations for the three and nine months ended December 31, 2007.

The Company does not hold or issue commodity derivatives for speculative or trading purposes. The Company is exposed to credit losses in the event of nonperformance by the counterparty to its commodity derivatives. It is anticipated, however, that its counterparty will be able to fully satisfy its obligations under the commodity derivatives contracts. The Company does not obtain collateral or other security to support its commodity derivatives contracts subject to credit risk but does monitor the credit standing of the counterparty. The price we receive for production in our three fields is indexed to Wyoming Sweet crude oil posted price.The Company has not hedged the basis differential between the NYMEX price and the Wyoming Sweet price.

Note 9—Subsequent Events

Financing Letter of Intent

Subsequent to December 31, 2007, the Company executed a non-binding letter of intent with an experienced industry operator (the “Industry Operator”) under which the Industry Operator will spend up to $83.5 million to earn up to a 55% working interest in the Company’s three fields in the Powder River Basin - the Big Muddy, Cole Creek South, and South Glenrock B. The earn-in period is expected to be three years, or less depending on the requirements of the development plan. Upon the closing, the Industry Operator will provide $12,240,000 of the funds to retire the Short Term Note Payable (Note 5) and the remainder of the funds will be utilized primarily for the development of the Company’s CO₂enhanced oil recovery (EOR) project in its three fields. The transaction is subject to regular corporate approvals, completion of due diligence and other conditions. Closing is scheduled to occur on or before April 30, 2008.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The statements contained in this Quarterly Report on Form 10-Q that are not historical are “forward-looking statements”, as that term is defined in Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that involve a number of risks and uncertainties. These forward-looking statements include, among others, the following:

	•		business strategy;

	•		water availability and waterflood production targets;

	•		carbon dioxide (CO₂) availability, deliverability, and tertiary production targets;

	•		construction of a CO₂pipeline and surface facilities;

	•		inventories, projects, and programs;

	•		other anticipated capital expenditures and budgets;

	•		future cash flows and borrowings;

	•		the availability and terms of financing;

	•		oil reserves;

	•		reservoir response to CO₂ injection;

	•		ability to obtain permits and governmental approvals;

	•		technology;

	•		financial strategy;

	•		realized oil prices;

	•		production;

	•		lease operating expenses, general and administrative costs, and finding and development costs;

	•		availability and costs of drilling rigs and field services;

	•		future operating results;

	•		plans, objectives, expectations, and intentions and

	•		terms of and ability to close the proposed letter of intent financing arrangement

These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and other sections of this Quarterly Report. Forward-looking statements are typically identified by use of terms such as “may”, “could”, “should”, “expect”, “plan”, “project”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “target” or “continue”, the negative of such terms or other comparable terminology, although some forward-looking statements may be expressed differently.

The forward-looking statements contained in this Quarterly Report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this Quarterly Report are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to the factors listed in the “Risk Factors” section and elsewhere in our Annual Report on Form 10-K for the year ended March 31, 2007. All forward-looking statements speak only as of the date of this Quarterly Report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Organization

Rancher Energy is an independent energy company which explores for and develops, produces, and markets oil & gas in North America. Prior to April 2006, Rancher Energy, formerly known as Metalex Resources, Inc. (“Metalex”), was engaged in the exploration of a gold prospect in British Columbia, Canada. Metalex found no commercially exploitable deposits or reserves of gold. During April 2006, stockholders voted to change the name to Rancher Energy Corp. Since April 2006, we have employed a new Chief Executive Officer, Chief Operating Officer, Senior Vice President, Engineering, and Chief Accounting Officer and are actively pursuing oil & gas prospects in the Rocky Mountain region.

We operate three fields in the Powder River Basin, Wyoming, which is located in the Rocky Mountain region of the United States. The fields, acquired in December 2006 and January 2007, are the South Glenrock B Field, the Big Muddy Field, and the Cole Creek South Field. All three fields currently produce some oil and are waterflood or CO₂ tertiary recovery candidates. We plan to substantially increase production in our fields by using waterflood, CO₂injection and other enhanced oil recovery (EOR) techniques. To fund the acquisition of the three fields and our operating expenses, from June 2006 through January 2007, we sold $89.3 million of our securities in two private placements. In December 2006, we also entered into an agreement with the Anadarko Petroleum Corporation to supply us with CO₂needed to conduct CO₂ tertiary recovery operations in our three fields.

Since late 2006 we have added operating staff and have engaged consultants to conduct field studies of secondary (waterflood) and tertiary( CO₂flood) development of the three Powder River Basin fields. To date, work has focused on field and engineering studies to prepare for development operations. We have also engaged an engineering firm to evaluate routes and undertake the required front end engineering and design for the required CO₂ pipeline, as well as another engineering firm to evaluate and design surface facilities appropriate for CO₂injection.

Outlook for the Coming Year

On February 5, 2007 we executed a non-binding letter of intent with an experienced industry operator (the “industry partner”) under which the industry partner will invest up to $83.5 million in our CO₂ enhanced oil recovery (EOR) program in our three fields in the Powder River Basin of Wyoming. Under terms of the proposed financing agreement the industry partner will earn up to a 55% working interest in the three fields for its investment. The earn-in period is expected to be three years or less depending on the requirements of the development plan which is being developed jointly by Rancher and the industry partner. Closing of the transaction is scheduled to occur on or before April 30, 2008.

Results of Operations

Three Months Ended December 31, 2007 Compared to Three Months December 31, 2006

The following is a comparative summary of our results of operations:

		Three Months Ended December 31,
		2007		2006

Revenues:
Oil production (in barrels)		22,020		2,198
Net Oil price (per barrel)	$	77.40	$	47.96
Oil sales		1,704,267		105,416
Losses on derivative activities		(636,109)		-
Total revenues		1,068,158		105,416


Operating expenses:
Production taxes		207,588		11,192
Lease operating expenses		808,091		73,725
Depreciation, depletion, amortization, and accretion		319,391		37,155
Impairment of unproved properties		-		4,681
Exploration expense		55,945		220,191
General and administrative expense		1,735,482		1,200,405
Total operating expenses		3,126,497		1,547,349

Loss from operations		(2,058,339)		(1,441,933)

Other income (expense):
Interest expense and financing costs		(1,342,984)		-
Interest and other income		95,982		71,262
Total other income (expense)		(1,247,002)		71,262

Net loss	$	(3,305,341)	$	(1,370,671)

Overview. For the three months ended December 31, 2007, we reported a net loss of $3,305,341, or $0.03 per basic and fully-diluted share, compared to a net loss of $1,370,671, or $0.03 per basic and fully-diluted share, for the corresponding three months of 2006. We are a vastly different Company in the 2007 period as compared to the 2006 period. On December 22, 2006, we completed our acquisition of the Cole Creek South Field and South Glenrock B Field, and on January 4, 2007, we completed our acquisition of the Big Muddy Field. We also added technical, clerical and field operations staff since 2006 and have conducted numerous studies and evaluations of the properties acquired to enable us to carry out our Enhanced Oil Recovery (EOR) business plan. Discussions of individually significant period to period variances follow.

Revenue, production taxes, and lease operating expenses. For the three months ended December 31, 2007, we reflected net oil & gas sales of $1,704,267on 22,020 barrels of oil at $77.40 per barrel, production taxes (including ad valorem taxes) of $207,588 and lease operating expenses of $808,091, as compared to $105,416, $11,192 and $73,725, respectively, for the corresponding three months ended December 31, 2006. . As noted above, the 2006 period represented the ten day period from acquisition and covered only two of our three fields. For the three months ended December 31, 2007, production taxes were $9.43 per barrel, and lease operating expenses were $36.70 per barrel, an amount that includes unscheduled well repair and maintenance work, the majority of which are one-time costs.

Losses on risk management activities During the three months ended December 31, 2007 we entered into a crude oil derivative contract with an unrelated counterparty to set a price floor of $63 per barrel for 75% of our estimated crude oil production for the next two years, and a price ceiling of $83.50 for 45% of the same level of production. During the three months ended December 31, 2007 we recorded realized losses on the risk management activities of $57,674 and unrealized losses of $578,435.

Depreciation, depletion, amortization and accretion. For the three months ended December 31, 2007, we reflected depreciation, depletion, and amortization of $319,391 ($291,707 related to oil & gas properties, and $47,684 related to other assets) as compared to $37,155 for the corresponding three months ended December 31, 2006. For the three months ended December 31, 2007, depreciation, depletion, and amortization of oil & gas properties was $12.84 per barrel.

Exploration expense. For the three months ended December 31, 2007, we reflected exploration expense of $55,945 as compared to $220,191 for the corresponding three months ended December 31, 2006. The exploration expense is attributed to geological and geophysical work at our Cole Creek South Field, the South Glenrock B Field, and the Big Muddy Field. The much higher level of expense in 2006 reflects the significant efforts to evaluate the newly acquired fields in the period as compared to a more routine level of efforts in 2007.

General and administrative expense. For the three months ended December 31, 2007, we reflected general and administrative expenses of $1,735,482 as compared to $1,200,405 for the corresponding three months ended December 31, 2006. The increase is primarily attributed to staff additions, office expansion and other actions to increase our capacity to manage our oil & gas operations. For the three months ended December 31, 2007, included in general and administrative expenses is stock-based compensation expense, restricted stock compensation expense, and services exchanged for common stock to non-employee directors that aggregate $394,209. Other key elements comprising the increase include salaries, Sarbanes-Oxley compliance, audit fees, legal, and reservoir engineering. For the three months ended December 31, 2006, included in general and administrative expenses is stock-based compensation of $491,000.

Interest expense and financing costs. For the three months ended December 31, 2007, we reflected interest expense and financing costs of $1,342,984 as compared to $-0-for the corresponding three months ended December 31, 2006. The 2007 amount is comprised of interest paid on the Note Payable issued in October 2007 of $310,080, and amortization of deferred financing costs and discount on Note Payable of $1,032,904. During the 2006 period we had no debt.

Interest and other income. For the three months ended December 31, 2007, we reflected interest and other income of $95,982 as compared to $71,292 for the corresponding three months ended December 31, 2006. The interest and other income included in 2007 primarily reflects earnings on excess cash derived from our October 2007 debt issuance. Interest earned in the 2006 period reflects earnings on excess cash from our private placements in June, October and December 2006.

Nine Months Ended December 31, 2007 Compared to Nine Months December 31, 2006

The following is a comparative summary of our results of operations:

		Nine Months Ended December 31,
		2007		2006
Revenues:
Oil production (in barrels)		68,076		2,198
Oil price (per barrel)	$	68.83	$	47.96
Oil sales		4,685,373		105,416
Losses on derivative activities		(636,109)		-
Total revenues		4,049,264		105,416


Operating expenses:
Production taxes		570,239		11,192
Lease operating expenses		2,087,753		73,725
Depreciation, depletion, amortization, and accretion		1,097,255		37,155
Impairment of unproved properties		-		385,526
Exploration expense		186,772		235,131
General and administrative expense		5,788,574		2,166,687
Total operating expenses		9,730,593		2,909,416

Loss from operations		(5,681,329)		(2,804,000)

Other income (expense):
Liquidated damages pursuant to registration rights arrangement		(2,645,393)		-
Interest expense and financing costs		(1,555,417)		(33,000)
Interest and other income		169,846		94,747
Total other income (expense)		(4,030,964)		61,747

Net loss	$	(9,712,293)	$	(2,742.253)

Overview. For the nine months ended December 31, 2007, we reported a net loss of $9,712,293, or $0.09 per basic and fully-diluted share, compared to a net loss of $2,742,253, or $0.07 per basic and fully-diluted share, for the corresponding nine months of 2006. We are a vastly different Company in the 2007 period as compared to the 2006 period. On December 22, 2006, we completed our acquisition of the Cole Creek South Field and South Glenrock B Field, and on January 4, 2007, we completed our acquisition of the Big Muddy Field. We also added technical, clerical and field operations staff since 2006 and have conducted numerous studies and evaluations of the properties acquired to enable us to carry out our Enhanced Oil Recovery (EOR) business plan. Discussions of individually significant period to period variances follow.

Revenue, production taxes, and lease operating expenses. For the nine months ended December 31, 2007, we reflected net oil & gas sales of $4,685,373 on 68,076 barrels of oil at $68.83 per barrel, production taxes (including ad valorem taxes) of $570,239 and lease operating expenses of $2,087,753, as compared to $105,416, $11,192 and $73,725, respectively, for the corresponding nine months ended December 31, 2006. As noted above, the 2006 period represented the ten day period from acquisition and covered only two of our three fields. For the nine months ended December 31, 2007, production taxes were $8.38 per barrel, and lease operating expenses were $30.67per barrel, an amount that includes unscheduled well repair and maintenance work, the majority of which are one-time costs.

Losses on risk management activities During the nine months ended December 31, 2007 we entered into a crude oil derivative contract with an unrelated counterparty to set a price floor of $63 per barrel for 75% of our estimated crude oil production for the next two years, and a price ceiling of $83.50 for 45% of the same level of production. During the nine months ended December 31, 2007 we recorded realized losses on the risk management activities of $57,674 and unrealized losses of $578,435.

Depreciation, depletion, amortization and accretion. For the nine months ended December 31, 2007, we reflected depreciation, depletion, and amortization of $1,097,255 ($968,445 related to oil & gas properties, and $128,810 related to other assets) as compared to $37,115 for the corresponding nine months ended December 31, 2006. For the nine months ended December 31, 2007, depreciation, depletion, and amortization of oil & gas properties was $13.25 per barrel.

Impairment expense. For the nine months ended December 31, 2007 there was no impairment of unproved properties, as compared to $385,526, related solely to the Burke Ranch property, for the corresponding nine months ended December 31, 2006.

Exploration expense. For the nine months ended December 31, 2007, we reflected exploration expense of $186,772 as compared to $235,131 for the corresponding nine months ended December 31, 2006. The exploration expense is attributed to geological and geophysical work at our Cole Creek South Field, the South Glenrock B Field, and the Big Muddy Field.

General and administrative expense. For the nine months ended December 31, 2007, we reflected general and administrative expenses of $5,788,574 as compared to $2,166,687 for the corresponding nine months ended December 31, 2006. The increase is primarily attributed staff additions, office expansion and other actions to increase our capacity to manage our oil & gas operations. For the nine months ended December 31, 2007, included in general and administrative expenses is stock-based compensation expense, restricted stock compensation expense, and services exchanged for common stock to a non-employee and non-employee directors that aggregate $1,380,343. Other key elements comprising the increase include salaries, Sarbanes-Oxley compliance, audit fees, legal, and reservoir engineering. For the nine months ended December 31, 2006, included in general and administrative expenses is stock-based compensation of $1,020,739.

Liquidated damages pursuant to registration rights agreement. In connection with our equity private placement in December 2006 and January 2007, we entered into a registration rights agreement and agreed to file a registration statement to register for resale the shares of common stock. The agreement includes provisions for payment if the registration statement was not declared effective by May 20, 2007, and additional payments were due if there were additional delays in obtaining effectiveness. During the nine months ended December 31, 2007, we paid liquidated damages totaling $2,645,393 by issuing shares of our common stock. The registration statement was declared effective on October 31, 2007 and no damages have been paid since that date.

Interest expense and financing costs. For the three months ended December 31, 2007, we reflected interest expense and financing costs of $1,555,417 as compared to $33,00 for the corresponding nine months ended December 31, 2006. The 2007 amount is comprised of interest paid on the Note Payable issued in October 2007 of $310,080, imputed interest on the liquidated damages pursuant to the registration rights arrangement discussed above of $112,488 and amortization of deferred financing costs and discount on Note Payable of $1,132,849.

Interest and other income. For the nine months ended December 31, 2007, we reflected interest and other income of $169,846 as compared to $97,747 for the corresponding nine months ended December 31, 2006. The interest and other income included in 2007 primarily reflects earnings on excess cash derived from the December 2006 and January 2007 private placement of units and our October 2007 debt issuance. Interest earned in the 2006 period reflects earnings on excess cash from our private placements in June, October and December 2006.

Liquidity and Capital Resources

As of December 31, 2007, we had working capital of $146,402

We have revenue from production operations in our three fields. However, we currently have negative cash flow from operating activities. Monthly oil & gas production revenue is adequate to cover monthly field operating costs and production taxes at the current time. Only a portion of the remaining cash costs, which consist primarily of general and administrative expenses and interest expense are covered by cash flow.

Our currently available cash sources are not sufficient to fund our planned expenditures for the secondary and tertiary development of our three fields. Essentially all of the necessary funding for their development is expected to come from, and is dependent on, successful completion of a debt, equity or other financing arrangements.

Short-Term Financing

On October 16, 2007, we borrowed $12,240,000 pursuant to a Term Credit Agreement with GasRock Capital LLC (GasRock). We received net proceeds of $11,622,800 after the deduction of GasRock’s fees, expenses, and three months of interest to be held in escrow. In addition, we incurred approximately $390,000 in investment banking, legal, and other fees and expenses in connection with the transaction.

All amounts outstanding under the Credit Agreement are due and payable on October 31, 2008 (Maturity Date), and bear interest at a rate equal to the greater of (a) 12% per annum and (b) the LIBOR rate plus 6% per annum. We are required to make monthly interest payments on the amounts outstanding under the Credit Agreement but are not required to make any principal payments until the Maturity Date. We may prepay the amounts outstanding under the Credit Agreement at any time without penalty.

Our obligations under the Credit Agreement are secured by a first priority security interest in all of our properties and assets, including all rights under our oil & gas leases in our three producing oil fields in the Powder River Basin of Wyoming and all of our equipment on those properties.

We also granted GasRock a 2% Overriding Royalty Interest (ORRI), proportionally reduced when our working interest is less than 100%, in all crude oil and natural gas produced from our three Powder River Basin fields. As long as any of our obligations remain outstanding under the Credit Agreement, we will be required to grant the same ORRI to GasRock on any new working interests acquired by us after closing. Prior to the Maturity Date, we may re-acquire 50% of the ORRI granted to GasRock at a repurchase price calculated to ensure that total payments by us to GasRock of principal, interest, ORRI revenues, and ORRI repurchase price will equal 120% of the loan amount.

As required by the Credit Agreement, we entered into an oil hedge agreement covering approximately 75% of our proved developed producing reserves scheduled to be produced during a two-year period. We have entered into a Participating Cap Costless Collar with BP Corporation North America Inc. (BP) with a price floor of $65/bbl for NYMEX light sweet crude oil on 75% of our scheduled production and a ceiling price of $83.50 on 45% of our scheduled production. The price we receive for production in our three fields is indexed to Wyoming Sweet crude oil posted price. We have not hedged the basis differential between the NYMEX price and the Wyoming Sweet price.

We are subject to various restrictive covenants under the Credit Agreement, including limitations on our ability to sell properties and assets, pay dividends, extend credit, amend our material contracts, incur indebtedness, provide guarantees, effect mergers or acquisitions (other than to change our state of incorporation), cancel claims, create liens, create subsidiaries, amend our formation documents, make investments, enter into transactions with our affiliates, and enter into swap agreements. We must maintain (a) a current ratio of at least 1.0 (excluding from the calculation of current liabilities any loans outstanding under the Credit Agreement) and (b) a loan-to-value ratio greater than 1.0 to 1.0 for the term of the loan.

The Credit Agreement contains several events of default, including if, at any time after closing, our most recent reserve report indicates that our projected net revenue attributable to our proved reserves is insufficient to fully amortize the amounts outstanding under the Credit Agreement within a 48-month period and we are unable to demonstrate to GasRock’s reasonable satisfaction that we would be able to satisfy such outstanding amounts through a sale of our assets or equity. Upon the occurrence of an event of default under the Credit Agreement, GasRock may accelerate our obligations under the Credit Agreement. Upon certain events of bankruptcy, our obligations under the Credit Agreement would automatically accelerate. In addition, at any time that an event of default exists under the Credit Agreement, we will be required to pay interest on all amounts outstanding under the Credit Agreement at a default rate, which is equal to the then-prevailing interest rate under the Credit Agreement plus four percent per annum.

Financing Letter of Intent

On February 5, 2008, we executed a non-binding letter of intent with an experienced oil & gas industry operator (the “Industry Operator”) under which up to $83.5 million in financing is expected to be invested in our CO₂ enhanced oil recovery (EOR) program in our three Powder River Basin fields, Big Muddy, Cole Creek South, and South Glenrock B. Under terms of the proposed financing agreement, in return for an $83.5 million investment, the Industry Operator will earn up to a 55% working interest in the fields. The earn-in period is expected to be three years, or less depending on the requirements of the development plan. Upon closing, the Industry Operator will provide immediate funding to enable us to pay off the short term note. The remainder of the funds will be expended on our CO₂EOR program in accordance with a schedule we plan to jointly develop with the Industry Operator. The closing of the transaction ,is subject to regular corporate approval, completion of due diligence and certain other conditions, and is scheduled to occur on or before April 30, 2008.

We anticipate that after closing of the financing transaction , the pay off of the short term note and with continued oil production from our existing fields, we will have sufficient cash reserves to fund our near term operations . Dependent upon the results of the CO₂ development work carried out during the earn in period we may raise additional financing through debt or equity sales for working capital and to fund our development efforts.

In the event the financing is not completed as planned, the existing funds from the short-term financing together with proceeds from existing production should be sufficient to cover the negative cash flow from operations through the Maturity Date of the short-term financing. Without additional funding, we would not be able to repay the short-term financing on the Maturity Date. Accordingly, if the financing is not completed as planned, we will reconsider our business plan and consider other strategic alternatives, which could include partnering with other industry participants, property sales, and a scale back of operating plans and staffing.

Cash Flows

The following is a summary of Rancher Energy’s comparative cash flows:

		For the Nine Months Ended December 31,
		2007		2006
Cash flows from:
Operating activities	$	(3,560,062	)	(1,020,199	)
Investing activities		(2,393,803	)	(50,648,901	)
Financing activities		11,077,073		83,550,370

Cash flows used for operating activities increased primarily as a result of general and administrative expenses incurred in connection with the expansion of the Company’s oil & gas operations and interest expense incurred in connection with the October 2007 short term financing.

Cash flows used for investing activities decreased significantly in the 2007 period compared to the 2006 period. During the nine months ended December 31, 2007 and 2006, net cash used for investing activities included acquisitions of oil and gas properties of $-0- and $50,225,944; $2,087,871 and $298,114 for capital expenditures on existing oil and gas properties; and $797,432 and $124,843 for the acquisition of other assets, respectively. Expenditures for oil & gas properties during the nine months ended December 31, 2007 were reduced by net proceeds of $491,500 from the conveyance of certain unproved oil & gas properties.

During the nine months ended December 31, 2007, cash flows provided by financing activities included $11,377,423 of net proceeds from the short term debt financing discussed above; funds used for offering costs associated with the registration of certain equity securities included in our Form S-1 and subsequent amendments filed with the Securities and Exchange Commission in the amount of $300,365. During the nine months ended December 31, 2006, cash flows provided by financing activities included $500,000 of proceeds from the issuance of notes payable that were converted to common stock, $8,112,862 of proceeds, net of offering costs, from the sale of common stock and warrants in connection with a Regulation S offering, and $74,937,508 of proceeds, net of offering costs for the sale of common stock and warrants.

Off-Balance Sheet Arrangements

Other than operating leases, we do not have any off-balance sheet arrangements, and we do not have any unconsolidated subsidiaries.

Critical Accounting Policies and Estimates

Critical accounting policies and estimates are provided in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, to the Annual Report on Form 10-K for the year ended March 31, 2007. Additional footnote disclosures are provided in Notes to Consolidated Financial Statements in Part I, Financial Information, Item 1, Financial Statements to this Quarterly Report on Form 10-Q for the nine months ended December 31, 2007.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Commodity Price Risk

Because of our relatively low level of current oil & gas production, we are not exposed to a great degree of market risk relating to the pricing applicable to our oil production. However, our ability to raise additional capital at attractive pricing, our future revenues from oil & gas operations, our future profitability and future rate of growth depend substantially upon the market prices of oil and natural gas, which fluctuate widely. With increases to our production, exposure to this risk will become more significant. We expect commodity price volatility to continue. In connection with our short term financing in October 2007, we entered into an oil hedge agreement covering approximately 75% of our proved developed producing reserves scheduled to be produced during a two-year period. Terms of future debt facilities may also require that we hedge a portion of our expected future production.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. Evaluations have been performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such terms are defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act). We view internal control over financial reporting to be an integral part of our disclosure control over financial reporting. Based on the evaluation of our Chief Executive Officer and Chief Accounting Officer that there are material weaknesses in our internal control over financial reporting, we concluded that our disclosure controls and procedures are not effective as of December 31, 2007. The weaknesses and our remediation efforts were discussed in our Form 10-K filed with the SEC on June 29, 2007. Since June 29, 2007, we have implemented additional remediation efforts including:

1.	The appointment of a Chief Accounting Officer with significant experience in financial reporting:

2.	The implementation of quarterly fraud assessments carried out by management as part of our financial closing process;

3.	The appointment of an independent, experienced accounting and business advisory firm to review public filings for completeness and to consult on complex or emerging accounting issues;

4.	The appointment of an experienced consulting firm to assist in the development of internal control process documentation and to conduct independent testing of such controls and processes;

5.	The implementation of a new accounting software system, with significantly enhanced segregation of duties and formal authority processes.

Our management does not expect that our disclosure controls and procedures will prevent all errors and all fraud. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Based on the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realties that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Changes in Internal Control over Financial Reporting

The following changes in our internal controls over financial reporting that occurred during the nine months ended December 31, 2007 have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting:

1.	The appointment of four new independent directors;

2.	The establishment of an Audit Committee;

3.	The establishment of a Compensation Committee;

4.	The establishment of a Nominating and Corporate Governance Committee;

5.	The adoption of an updated Code of Business Conduct and Ethics; and

6.	The adoption of an Insider Trading Policy, and:

7.	The appointment of a Chief Accounting Officer.

Because the testing of these controls has not been completed, the operating effectiveness of these changes has yet to be fully evaluated. Accordingly, the material weaknesses in our internal control over financial reporting as discussed above and in our Form 10-K filed with the SEC on June 29, 2007 remain in effect as of December 31, 2007, the end of the period covered by this Quarterly Report on Form 10-Q.

PART II. OTHER INFORMATION

Item 1A. Risk Factors.

As a result of the completion of our short-term debt financing in October 2007, we have amended the risk factors discussed in Part I, “Item 1A Risk Factors” in our Annual Report on Form 10-K, as amended, for the year ended March 31, 2007 by adding the two below risk factors. In addition to the other information set forth in this report and the below risk factors, you should carefully consider the risk factors, discussed in our Annual Report on Form 10-K, as amended, for the year ended March 31, 2007, which could materially affect our business, financial condition and/or future results of operations. The risks, described in our Annual Report on Form 10-K and below, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or results of operations. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K, as amended, for the year ended March 31, 2007 other than the addition of the two below risk factors.

If we are unable to obtain additional financing our business plans will not be achievable.

Our current cash position will not be sufficient to fund the development of the Big Muddy Field for waterflood operations and our three properties for CO₂ EOR operations. We will require substantial additional funding. Our plan is to obtain debt or equity financing. The terms of any such financing may restrict our future business activities and expenditures. We do not know if additional financing will be available at all when needed or on acceptable terms. Insufficient funds will prevent us from implementing our secondary and tertiary recovery business strategy.

Our October 2007 short-term debt financing required the imposition of a mortgage interest in favor of our lender on our three fields and a default by us of the financing terms could result in the foreclosure and loss of one or more of our fields and other assets.

We borrowed $12 million in October 2007, which is due in October 2008, and granted to the lender a mortgage on our interests in three fields and our other assets. We plan to use these funds to increase oil production and for working capital. We do not expect that our cash flow from operations or other assets will be sufficient to repay this loan. We have recently entered into a letter of intent for a financing; however, the letter of intent is non-binding, subject to conditions and may not close. There is no assurance that other funding would be available. If we are not successful in repaying this debt within the term of the loan, or default under the terms of the loan, the lender will be able to foreclose one or more of our three properties and other assets and we could lose the properties. A foreclosure could significantly reduce or eliminate our property interests, force us to alter our business strategy, which could involve the sale of properties or working interests in the properties, and adversely affect our results of operations and financial condition.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On December 31, 2007, pursuant to our compensation arrangement with our non-employee directors, we issued 275,001 shares of our common stock in the aggregate under our 2006 Stock Incentive Plan to our non-employee directors for their service on our Board of Directors and for attending board and committee meetings, as the case may be. More specifically, we issued to the following directors the shares specified: (i) William A. Anderson, 61,111 shares; (ii) Joseph P. McCoy, 69,445 shares, (iii) Patrick M. Murray, 41,667 shares, (iv) Myron M. Sheinfeld, 41,667 shares, and (v) Mark Worthey, 61,111 shares. The foregoing issuances were made pursuant to Section 4(2) of the Securities Act.

ITEM 6. EXHIBITS

Exhibit		Description
3.1		Amended and Restated Articles of Incorporation ⁽¹⁷⁾
3.2		Articles of Correction ⁽²²⁾
3.3		Amended and Restated Bylaws ⁽²⁾
4.1		Form of Stock Certificate for Fully Paid, Non-Assessable Common Stock of the Company ⁽¹⁾
4.2		Form of Unit Purchase Agreement ⁽²⁾
4.3		Form of Warrant Certificate ⁽²⁾
4.4		Form of Registration Rights Agreement, dated December 21, 2006 ⁽³⁾
4.5		Form of Warrant to Purchase Common Stock ⁽³⁾
10.1		Burke Ranch Unit Purchase and Participation Agreement between Hot Springs Resources Ltd. and PIN Petroleum Partners Ltd., dated February 6, 2006⁽⁴⁾
10.2		Employment Agreement between John Works and Rancher Energy Corp., dated June 1, 2006 ⁽⁵⁾
10.3		Assignment Agreement between PIN Petroleum Partners Ltd. and Rancher Energy Corp., dated June 6, 2006 ⁽⁵⁾
10.4		Loan Agreement between Enerex Capital, Corp. and Rancher Energy Corp., dated June 6, 2006 ⁽⁵⁾
10.5		Letter Agreement between NITEC LLC and Rancher Energy Corp., dated June 7, 2006 ⁽⁵⁾
10.6		Loan Agreement between Venture Capital First LLC and Rancher Energy Corp., dated June 9, 2006 ⁽⁶⁾
10.7		Exploration and Development Agreement between Big Snowy Resources, LP and Rancher Energy Corp., dated June 15, 2006 ⁽⁵⁾
10.8		Assignment Agreement between PIN Petroleum Partners Ltd. and Rancher Energy Corp., dated June 21, 2006 ⁽⁵⁾
10.9		Purchase and Sale Agreement between Wyoming Mineral Exploration, LLC and Rancher Energy Corp., dated August 10, 2006 ⁽⁴⁾
10.10		South Glenrock and South Cole Creek Purchase and Sale Agreement by and between Nielson & Associates, Inc. and Rancher Energy Corp., dated October 1, 2006 ⁽⁷⁾
10.11		Rancher Energy Corp. 2006 Stock Incentive Plan⁽⁷⁾
10.12		Rancher Energy Corp. 2006 Stock Incentive Plan Form of Option Agreement ⁽⁷⁾
10.13		Employment Agreement by and between John Dobitz and Rancher Energy Corp., dated October 2, 2006 ⁽⁷⁾
10.14		Denver Place Office Lease between Rancher Energy Corp. and Denver Place Associates Limited Partnership, dated October 30, 2006 ⁽⁸⁾
10.15		Employment Agreement between Andrew Casazza and Rancher Energy Corp., dated October 23, 2006 ⁽⁹⁾
10.16		Finder’s Fee Agreement between Falcon Capital and Rancher Energy Corp. ⁽¹⁰⁾
10.17		Amendment to Purchase and Sale Agreement between Wyoming Mineral Exploration, LLC and Rancher Energy Corp. ⁽¹¹⁾
10.18		Letter Agreement between Certain Unit Holders and Rancher Energy Corp., dated December 8, 2006 ⁽²⁾
10.19		Letter Agreement between Certain Option Holders and Rancher Energy Corp., dated December 13, 2006⁽²⁾
10.20		Product Sale and Purchase Contract by and between Rancher Energy Corp. and the Anadarko Petroleum Corporation, dated December 15, 2006 ⁽¹²⁾
10.21		Amendment to Purchase and Sale Agreement between Nielson & Associates, Inc. and Rancher Energy Corp. ⁽¹³⁾
10.22		Securities Purchase Agreement by and among Rancher Energy Corp. and the Buyers identified therein, dated December 21, 2006 ⁽³⁾
10.23		Lock-Up Agreement between Rancher Energy Corp. and Stockholders identified therein, dated December 21, 2006 ⁽³⁾
10.24		Voting Agreement between Rancher Energy Corp. and Stockholders identified therein, dated as of December 13, 2006 ⁽³⁾
10.25		Form of Convertible Note ⁽¹⁴⁾
10.26		Employment Agreement between Daniel Foley and Rancher Energy Corp., dated January 12, 2007 ⁽¹⁵⁾

Exhibit		Description
10.27		First Amendment to Securities Purchase Agreement by and among Rancher Energy Corp. and the Buyers identified therein, dated as of January 18, 2007 ⁽¹⁶⁾
10.28		Rancher Energy Corp. 2006 Stock Incentive Plan Form of Restricted Stock Agreement ⁽¹⁹⁾
10.29		First Amendment to Employment Agreement by and between John Works and Rancher Energy Corp., dated March 14, 2007 ⁽¹⁸⁾
10.30		Employment Agreement between Richard Kurtenbach and Rancher Energy Corp., dated August 3, 2007⁽²⁰⁾
10.31		Term Credit Agreement between Rancher Energy Corp. and GasRock Capital LLC, dated as of October 16, 2007 ⁽²¹⁾
10.32		Term Note made by Rancher Energy Corp. in favor of GasRock Capital LLC, dated October 16, 2007 ⁽²¹⁾
10.33		Mortgage, Security Agreement, Financing Statement and Assignment of Production and Revenues from Rancher Energy Corp. to GasRock Capital LLC, dated as of October 16, 2007 ⁽²¹⁾
10.34		Security Agreement between Rancher Energy Corp. and GasRock Capital LLC, dated as of October 16, 2007 ⁽²¹⁾
10.35		Conveyance of Overriding Royalty Interest by Rancher Energy Corp. in favor of GasRock Capital LLC, dated as of October 16, 2007 ⁽²¹⁾
10.36		ISDA Master Agreement between Rancher Energy Corp. and BP Corporation North America Inc., dated as of October 16, 2007 ⁽²¹⁾
10.37		Restricted Account and Securities Account Control Agreement by and among Rancher Energy Corp., GasRock Capital LLC, and Wells Fargo Bank, National Association, dated as of October 16, 2007 ⁽²¹⁾
10.38		Intercreditor Agreement by and among Rancher Energy Corp., GasRock Capital LLC, and BP Corporation North America Inc., dated as of October 16, 2007 ⁽²¹⁾
10.39		First Amendment to Denver Place Office lease between Rancher Energy Corp. and Denver Place Associates Limited Partnership, dated March 6, 2007. ⁽¹⁸⁾
10.40		Joint Venture Financing Letter of Intent, dated February 6, 2008. ⁽²³⁾
10.41		CO₂Supply Agreement, dated _______, 2008. ⁽²⁴⁾
31.1		Certification Pursuant to Rule 13a-14(a)/15d-14(a) (Chief Executive Officer)
31.2		Certification Pursuant to Rule 13a-14(a)/15d-14(a) (Chief Accounting Officer)
32.1		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)	Incorporated by reference from our Form SB-2 Registration Statement filed on June 9, 2004.

(2)	Incorporated by reference from our Current Report on Form 8-K filed on December 18, 2006.

(3)	Incorporated by reference from our Current Report on Form 8-K filed on December 27, 2006.

(4)	Incorporated by reference from our Quarterly Report on Form 10-Q/A filed on August 28, 2006.

(5)	Incorporated by reference from our Annual Report on Form 10-K filed on June 30, 2006.

(6)	Incorporated by reference from our Current Report on Form 8-K filed on June 21, 2006.

(7)	Incorporated by reference from our Current Report on Form 8-K filed on October 6, 2006.

(8)	Incorporated by reference from our Current Report on Form 8-K filed on November 9, 2006.

(9)	Incorporated by reference from our Current Report on Form 8-K filed on November 14, 2006.

(10)	Incorporated by reference from our Current Report on Form 8-K/A filed on November 14, 2006.

(11)	Incorporated by reference from our Current Report on Form 8-K filed on December 4, 2006.

(12)	Incorporated by reference from our Current Report on Form 8-K filed on December 22, 2006.

(13)	Incorporated by reference from our Current Report on Form 8-K filed on December 27, 2006.

(14)	Incorporated by reference from our Current Report on Form 8-K filed on January 8, 2007.

(15)	Incorporated by reference from our Current Report on Form 8-K filed on January 16, 2007.

(16)	Incorporated by reference from our Current Report on Form 8-K filed on January 25, 2007.

(17)	Incorporated by reference from our Current Report on Form 8-K filed on April 3, 2007.

(18)	Incorporated by reference from our Current Report on Form 8-K filed on March 20, 2007.

(19)	Incorporated by reference from our Annual Report on Form 10-K filed on June 29, 2007.

(20)	Incorporated by reference from our Current Report on Form 8-K filed on August 7, 2007.

(21)	Incorporated by reference from our Current Report on Form 8-K filed on October 17, 2007.

(22)	Incorporated by reference from our Form 10-Q for the quarterly period ended September 30, 2007.

(23)	Incorporated by reference from our Current Report on Form 8-K filed on February 7, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		RANCHER ENERGY CORP. (Registrant)

Dated: February 11, 2008	By:	/s/ John Works
		John Works President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer (Principal Executive Officer)


Dated: February 11, 2008	By:	/s/ Richard E. Kurtenbach
		Chief Accounting Officer (Principal Accounting Officer)