Exhibit 10.5

[niteclrg.jpg]NITEC LLC

June 7, 2006

John Works
Rancher Energy Corporation
1050 17th Street, Suite 1700
Denver, CO 80202

RE: Burke Ranch - Recoverable Oil Project

Dear John,

Based upon meetings in NITEC’s offices with Walter Merschat on January 9 and in
Casper on May 16 with Walter, Topr Bob and Mike Zwickl, we offer this proposal
for your approval.

The scope of work for this study will address only the tertiary recovery (CO2
injection) potential (Recoverable Oil) for the Dakota formation in the Burke
Ranch Unit.

We define the scope of work in this Study to be as follows:

• Review all relevant data you have provided
• Acquire additional data as required
• Estimate OOIP in the Dakota formation
• Estimate remaining oil in place in the Dakota formation
• Estimate Recoverable Oil in the Dakota formation under a CO2 recovery
mechanism
• Prepare and present a project report

In this document and subsequent study reports, it is anticipated that the term
Recoverable Oil will at a minimum be consistent with the term probable or
possible reserves. This is certainly the case for the tertiary recovery from the
Dakota formation at this time. Subsequent studies of the Dakota formation may
“convert” reserves from lesser categories into the proven category based upon
operational changes and new data.

Based on information found in the public domain on the Burke Ranch Field, it is
clear that the Burke Ranch Unit and Burke Ranch East Unit are in direct
communication. Burke Ranch East was discovered in 1973 and was at a pressure
level significantly less than Burke Ranch’s initial pressure at similar depth.
It is our understanding that water injection continues in the Burke Ranch East
Unit today and increased fluid levels have been observed in numerous Burke Ranch
wells.

475 Seventeenth Street, 14th Floor Denver, Colorado 80202
Tel: 303 292-9595 Fax: 303 292-9585 nitec@NITECLLC.com

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Based on this information, it is highly recommended that the two units (the
entire reservoir) are studied as a whole. This will necessitate that data be
found for the Burke Ranch East Unit in addition to the Burke Ranch Unit.

The Burke Ranch Unit operator has acquired and prepared a large amount of
historical data. We have been provided with a base map with well locations, well
files, well log image files, Burke Ranch Unit production histories (1978 to
date), and a structure map and a gross interval isopach map on the Dakota
formation and other miscellaneous data. No data has been provided for the Burke
Ranch East Unit.

There are some significant data items that have not been compile and provided to
us. Production data needs to be assembled by well for each well in the field
(both units). These data are available online from the Wyoming Oil and Gas
Conservation commission from 1978 to date. Pre-1978 data are available at the
Commission in paper form on a by well monthly basis. In addition, water
injection data by well are required to properly assess current saturations
levels in the field. (This is important for CO2 recovery performance.)

Digital well log data are not available. Typically, NITEC would recommend that
petrophysical analysis be carried out on a few wells in the field for porosity
and saturation determination. However, due to the apparent large amount of core
data and reports that are available, we currently do not believe that
petrophysical analysis of the well logs will be required. Hence, digital well
log data will not be required.

NITEC understands that formal certification of the reserves in this project may
be required. NITEC provides reserve evaluation and development services. NITEC
will have completed all the work necessary for certification to be carried. We
recommend that NITEC coordinate with your selected reserve certification company
during the project to minimize any unnecessary duplication of work. No budget
has been provided in the cost estimate for reserve certification work.

NITEC can provide the typical economic analysis of the Unit’s development under
CO2 operations for use by the certifying organization. This is offered as an
optional task.

TECHNICAL APPROACH

The project will be divided into 3 stages.

Stage  Description
1  Geology
2  Basic Engineering
3  Dakota Recoverable Oil

Geology

The existing data will be organized for efficient use by the project team. The
team geologist will
utilize the available well logs to validate and refine the existing structure
and gross thickness
isopach maps of the Dakota formation. Significant use will be made of the
geological work

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previously conducted and made available in the files. Full-field volumetric
estimates of OOIP based on these maps, initial fluid saturations and porosities
will be prepared for the Dakota formation. Initial saturation and porosity
values and distributions will be developed from the core analysis reports and
the various studies available in the project files. If adequate production data
are available (pre and post 1978), material balance will be used to verify these
volumetric OOIP estimates. This also assumes that adequate pressure data exist
to conduct the material balance calculations. (It is not clear at this time how
much pressure data is available over the life of the field.)

Basic Engineering

It appears that the production and injection records in the project files are
incomplete. No production data for the Burke Ranch East Unit wells have bee
provided. It is our understanding that only the Dakota formation has been
produced in the field. Any missing data will either be copied from the Wyoming
Conservation Commission archives or acquired from production data services.
Production histories for the Dakota formation will be prepared for each well.
These will be used to calculate total remaining oil in place for the Dakota
formation and for the Burke Ranch Unit alone.

One oil PVT analysis was found during the initial review of the data files.
Assuming that it is a valid, representative sample, it will be used in the
characterization of the Dakota oil for all material balance and simulation work.
This will eliminate the need to hypothesize the oil properties based on industry
correlations.

We understand that two phases of water injection have been carried out in the
Burke Ranch Unit, as well as a phase in the Burke Ranch East Unit. Water
injection records will be used to develop and understand water flood performance
and estimate remaining oil saturations. Water flood performance will be a strong
guide to reservoir continuity. These data will significantly improve the
reliability of the reservoir simulations to follow. This data will be acquired,
as appropriate, through the services of a Casper group experienced in locating
and copying Wyoming Conservation Commission records. Water injection data is not
maintained in digital form by the  ommission.

Dakota Recoverable Oil

Reservoir simulation will be used to characterize existing saturation levels in
the Dakota sand and forecast CO2 displacement efficiencies. Because the number
of wells in the total field are relatively small, the data is of newer vintage
and the east and west ends of the field are in communication, we believe that a
full-field simulation model will be more accurate and efficient to work with
than a sector model (as was used in the Big Muddy project). Production and
pressure records will be used to calibrate the model and estimate saturation
levels. “History matching” of historical data to calibrate the simulation model
will be approximate, but should provide a reasonable estimation of fluid
saturations and their areal distribution in the reservoir. Based on the possible
vertical discontinuity of the Dakota sand in various areas of the field, at
least 2-4 simulation model layers will likely be used. These layers may have
uniform properties depending on our ability to characterize the formation from
the available data. The full-field model will also provide an estimate of the
remaining oil distribution in the field. This may
indicate areas of by-passed oil which can be accessed through water injection or
CO2 operations.

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It is unlikely that additional primary oil potential will be found due to
current reservoir pressure levels.

Minimum miscibility pressure is often critical in the design of a CO2
displacement process, as miscible displacement is a more efficient process than
immiscible displacement. We believe that miscibility can likely be achievable in
the Burke Ranch field due to the Dakota formation’s depth and temperature. Our
experience with estimating the MMP in the Big Muddy Wall Creek project should
allow us to make a better MMP estimate in this field. However, an oil sample,
CO2-oil swelling tests and a rising bubble miscibility test would be more
definitive. If possible, we recommend that an oil sample be taken as soon as
possible and the noted tests carried out in a
reputable laboratory. Results should be made available to NITEC within 6 weeks
if they are to be used in the simulation work.

Note that the simulation model will also be used to investigate process, well
spacing and injection pattern sensitivities A WAG and a slug injection process
will be evaluated. A few sensitivities to WAG ratios and slug sizes will also be
investigated. This will be important data for future economic analyses. If time
and budget permit the simulation model can be used to investigate new well
locations and secondary recovery under closer well spacing.

The Dakota recovery potential (Recoverable Oil) under CO2 operations in the
Burke Ranch Unit area will be forecast using the simulation model. This will
require some assumptions about operations in the Burke Ranch East area. Reserve
certification will likely classify this recoverable oil as probable or possible
reserves.

A report will be prepared at the end of the study to document all data sources,
assumptions made and simulation results. This report will be complete enough to
provide a guide for reserve certification, and future detailed design studies
for field implementation.

NITEC will provide a one day project presentation in its Denver office if
required.

ESTIMATED TIME AND COST

NITEC will undertake this work on a time and materials basis. We believe that
this study can be completed in 3-4 months at an estimated cost of $95,000. NITEC
will charge for its services based on the attached standard price schedule.
Invoices will be issued monthly based on work completed. Payment is due within
30 days of receipt. Should NITEC find that this cost estimate may be exceeded,
we will advise you in advance and mutually agree upon a course of action. NITEC
is available to perform economic analyses of the appropriate production
development scenarios resulting from the simulations, if appropriate. We would
rely on Wyoming Mineral
Exploration to provide cost information associated with well completions,
pipelines, treating facilities, oil prices, etc. We believe that information
gathered for the Big Muddy Wall Creek project will be useful in this regard. We
estimate that only 1-2 weeks would be required to carry out this work once all
the economic data have been provided. This work would be at an additional cost
of approximately $8,000.

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We appreciate the opportunity to provide this proposal to you. Please feel free
to contact us with any questions you may have. We are prepared to start work on
the project immediately. If you are in agreement with this proposal and the
estimated cost to complete the scope of work, please sign below and fax this
document to us.

Sincerely,

/s/ Bill Savage
Bill Savage
Director

Agreed: ________________________

Name: __________________________

Title: ___________________________
 

Rancher Energy Corp.

Date: _____________, 2006

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