AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON



October 10, 2007



SECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, D.C.  20549



### FORM 10-QSB

(Mark One)

[  X ]          QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934For the quarterly period ended:August 31, 2007



[   ]           TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934For the transition period
from_________________ to _________________________



Commission file number:333-91191



### INTERMOUNTAIN REFINING CO., INC.

(Name of small business issuer in its
charter)



|NEW MEXICO                                                     | 74-2329327                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or other jurisdiction of incorporation or
organization) | (I.R.S. Employer Identification
Number)



1921 Bloomfield
BoulevardFarmington, New Mexico 
87401Telephone: (505)
326-2668(Address, including zip code, and
telephone number, including area code, of issuer's principal executive
offices)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
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 __

APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes_____ No
_____

(APPLICABLE ONLY TO CORPORATE
ISSUERS)



State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 1,155,609 shares
of common stock, no par value, were outstanding on September 30,
2007.Transitional Small Business Disclosure
Format (Check One): Yes[ ] No [X]

10-QSB 1<Page>

### Table Of Contents





|                                                                                      | Page
|------------------------------------------------------------------------------------- | ----
|Financial Statements of Intermountain                                                 | 2   
|Management's Discussion and Analysis of Financial Condition
and Results of Operations | 2   
|Intermountain's Business Activities                                                   | 2   
|Liquidity and Capital Resources                                                       | 3   
|Cash Requirements as of August 31, 2007                                               | 3   
|Results of Operations                                                                 | 4   
|Inflation, Deflation and Changing Prices                                              | 8   
|Critical Accounting Estimates                                                         | 8   
|Controls and Procedures                                                               | 8   
|Legal Proceedings                                                                     | 8   
|Submission of Matters to a Vote of Security
Holders                                   | 8   
|Index To Financial Statements                                                         | 9   
|Exhibits and Reports on Form 8-K                                                      | 14  
|Signatures                                                                            | 14  

### 

### Financial Statements of Intermountain

The financial statements of Intermountain as of August 31,
2007 and for the three and six month periods ended August 31, 2006 and August
31, 2007 are included beginning on page 9 of this report.



### Management's Discussion and Analysis of Financial Condition and Results of
Operations

The following discussion of our financial condition as of
August 31, 2007 and results of operations for the three and six month periods
ended August 31, 2006 and August 31, 2007, should be read in conjunction with
our financial statements and notes related thereto included elsewhere in this
report.

Some of the statements contained in this report relate to
future expectations, contain projections of results of operations or financial
condition or include other forward-looking information. When used in this
report, the words "estimate", "project", "anticipate", "intend", "believe",
"hope", "may" and similar expressions, as well as "will", "shall" and other
indications of future tense, are intended to identify forward-looking
statements. Those statements are subject to known and unknown risks,
uncertainties and other factors that could cause the actual results to differ
materially from those contemplated by the statements.  You are cautioned
not to place undue reliance on the forward-looking statements.

### 

### Intermountain's Business Activities

Intermountain was incorporated under the laws of the state of
New Mexico in January 1984 and conducts its business in the following
areas:

- Production of natural gas in New Mexico (Intermountain sold
its interest in all of its Kansas natural gas producing properties on February
28, 2007)
- Leasing, on a fee basis, of asphalt paving products
manufacturing and storage facilities in Fredonia, Arizona
- Other business activities including leasing unused space in
Intermountain's office building.

10-QSB 2<Page>

### Liquidity and Capital Resources:

While current cash balances are adequate to satisfy normal
operating costs, our present forecasts indicate that future cash flows from
current operations will not be sufficient to fully cover normal operating costs.
It is our intent to acquire, through purchase or merger, additional interests in
oil and/or natural gas producing properties to replace cash flows lost as the
result of the sale of our Kansas natural gas properties. There are presently no
formal plans or agreements in place and there is no assurance that we will enter
into any formal agreements in the near future that would have a significant
impact on Intermountain's financial condition.

The following table presents selected financial data regarding
cash and working capital:



|                          | February 28, 2007 | % Change | August 31, 2007
|------------------------- | ----------------- | -------- | ---------------
|Cash and cash equivalents | $  2,391,302      | (17)%    | $   1,981,717  
|                          |                   |          |                
|Working capital           | $  2,266,766      | (10)%    | $   2,036,270  

During the six months ended August 31, 2007, Intermountain
realized a $195,000 decrease in cash from operating activities and a $215,000
decrease in cash from non-operating activities.  There were no significant or
unusual operating cash items during the period. The $215,000 decrease in cash
from non-operating activities consisted mainly of $217,000 cash used to drill
and complete a replacement well in Kansas.

During the six months ended August 31, 2006, Intermountain
realized a $231,000 increase in cash from operating activities offset by a
$54,000 decrease in cash from non-operating activities. There were no
significant or unusual operating cash items during the period. The $54,000
decrease in cash from non-operating activities included $50,000 cash used for
electrical generation equipment improvements and $8,000 cash used for plugging
and abandonment of one natural gas well in Kansas.



### Cash requirements as of August 31,
2007:

Estimated cash requirements for the next twelve months
include:

- $24,000 per month in normal general and administrative costs
including costs to operate our Farmington office building
- $800 estimated monthly costs associated with the ownership
and maintenance of Intermountain's refinery and asphalt manufacturing and
storage facility

In its efforts to develop
additional sources of revenues, Intermountain may incur some project development
costs. We are unable to predict the level of costs that may be incurred for such
additional projects during the next year.

Expected sources of cash during the next twelve months consist
of cash flows from operating activities estimated as follows:

- $5,000 per month (net of production costs) from estimated
natural gas operations based on results of operations during the six months
ended August 31, 2007 along with projections of production and prices during the
next 12 months
- $1,000 per month from Farmington office space rental and
consulting services
- $5,600 per month interest and dividends earned on cash
balances and other investments
- $3,200 per month from the rental of our asphalt storage and
manufacturing facility plus an average of $8,300 per month in throughput fees
based on estimated annual asphalt product shipments of 10,000 tons during the
2007 paving season
- $370,000 of additional compensation from the sale of our
Kansas natural gas producing properties contingent on the successful return of
production from one of the Kansas gas units. During the six months ended August
31, 2007, Intermountain capitalized approximately $217,000 associated with
drilling and completing a replacement well on the unit. The well has not yet
developed sufficient operating pressure to produce saleable quantities of
natural gas. Intermountain's consultant believes that a large amount of water
had previously invaded the gas producing formation from a casing leak in the
original well, which has been plugged. Intermountain is presently attempting to
dewater the gas producing formation with the hope that the gas pressure will
improve to the point that saleable quantities of gas can be achieved.  There is
no assurance that resumption of production from the gas unit will be successful.

Estimates of future sources and uses of cash
presented herein are based on our assumptions and expectations that our
operations will continue at current levels without material interruption and
that collection of accounts will occur under agreed terms. Actual results may be
materially different.

### 10-QSB 3<Page>

### Results of Operations:

The following table summarizes the results of Intermountain's
operations for each of the periods indicated. All percentage amounts were
calculated using the underlying data.



|                               | Three months ended
|------------------------------ | ------------------
|                               | August 31, 2006   
|Revenues                       | $  230,432        
|Costs and Expenses             | 182,573           
|Net income before taxes        | 47,859            
|Income taxes expense           | 2,800             
|Net income                     | $   45,059        
|                               |                   
|                               | Six months ended  
|                               | August 31, 2006   
|Revenues                       | $   453,776       
|Costs and expenses             | 350,478           
|Net income (loss) before taxes | 103,298           
|Income taxes expense/(credit)  | 2,800             
|Net income (loss)              | $  100,498        



#### Revenues:

The following table presents a summary of our revenues for the
periods indicated. All percentage amounts were calculated using the underlying
data.



|                                             | Three months ended
|-------------------------------------------- | ------------------
|                                             | August 31, 2006   
|Oil and gas production                       | $  187,294        
|Asphalt equipment rental and throughput fees | 36,853            
|Real estate rental                           | 5,535             
|Other revenues                               | 750               
|Total Revenues                               | $  230,432        
|                                             |                   
|                                             | Six months ended  
|                                             | August 31, 2006   
|Oil and gas production                       | $   389,180       
|Asphalt equipment rental and throughput fees | 51,218            
|Real estate rental                           | 11,878            
|Other revenues                               | 1,500             
|Total Revenues                               | $  453,776        



Changes in individual components of revenues are discussed
below:



##### Oil and Natural gas revenues:

The following table contains oil and natural gas production
volumes, net to Intermountain's interest, and average sales prices received for
the periods indicated:

10-QSB 4<Page>



|                                | For the three months
ended | For the six months ended
|------------------------------- | -------------------------- | ------------------------
|                                | August 31, 2006            | August 31, 2007         
|Natural gas produced, net (Mcf) | 47,389                     | 4,786                   
|Average selling price ($/Mcf)   | $3.95                      | $7.92                   



The decrease in oil and natural gas revenues for the six
months ended August 31, 2007 compared to the six months ended August 31, 2006
consisted of a $23,000 decrease in New Mexico natural gas revenues and a
$289,000 decrease due to the sale of Intermountain's Kansas natural gas
producing properties in February, 2007. The reduction in New Mexico gas revenues
consisted of a 5,385 Mcf (37%) decrease in production offset by an average
$1.47/Mcf (21%) increase in average selling prices. Due to the complexity of
economic factors affecting energy prices, we are unable to predict the direction
or magnitude of future price changes. It is expected that Intermountain's
production of natural gas will decline slightly over the next twelve months
consistent with observed decline rates.

The decrease in oil and natural gas revenues for the six
months ended August 31, 2006 compared to the six months ended August 31, 2005
consisted of a $22,000 decrease in natural gas sales and a $19,000 decrease in
crude oil revenues. The decrease in natural gas revenues consisted of a 477 Mcf
(1%) increase in natural gas production offset by an average $0.26/Mcf (6%)
decrease in selling prices. Kansas natural gas revenues declined by $23,000,
which consisted of a 422 Mcf (1%) increase in production offset by a $0.31/Mcf
(8%) decrease in selling price. New Mexico natural gas revenues increased by
$1,000 which included a 55 Mcf  (0.4%) increase in production and a $.07/Mcf
(1%) increase in selling price. Intermountain sold its Nebraska crude oil
producing properties in November 2005.

The decrease in natural gas revenues for the three months
ended August 31, 2007 compared to the three months ended August 31, 2006
consisted of a $17,000 decrease in New Mexico natural gas sales and a $132,000
decrease due to the sale of Intermountain's Kansas natural gas producing
properties in February, 2007. The decrease in New Mexico gas revenues consisted
of a 3,954 Mcf (45%) decrease in production offset by an average $1.65/Mcf (26%)
increase in average selling prices.

The decrease in oil and natural gas revenues for the three
months ended August 31, 2006 compared to the three months ended August 31, 2005
consisted of an $18,000 decrease in natural gas revenues along with a $12,000
decrease in crude oil revenues. The decrease in natural gas revenues consisted
of a 263 Mcf (0.5%) decrease in natural gas production along with an average
$0.36/Mcf (8%) decrease in selling prices. Kansas natural gas revenues decreased
by $23,000, which consisted of a 1,604 Mcf (4%) decrease in production and an
average $0.42/Mcf (11%) decrease in selling price.  New Mexico natural gas
revenues increased by $4,000, which consisted of a 1,341 Mcf (18%) increase in
production offset by an average $0.56/Mcf (8%) decrease in selling price.
Intermountain sold its Nebraska crude oil producing properties in November 2005.

##### Leasing of asphalt products manufacturing and storage
facilities:

The increase in asphalt equipment rental and throughput fees
for the three and six months ended August 31, 2007 compared to the three and six
months ended August 31, 2006 was attributed to an overall 4,866 tons (84%)
increase in shipments of asphalt products from the facility.

The decrease in asphalt equipment rental and throughput fees
for the three and six months ended August 31, 2006 compared to the three and six
months ended August 31, 2005 was the result of an overall 4,745 tons (45%)
decrease in shipments of asphalt products from the facility.

##### Real estate rental:

The decrease in real estate rental revenues for the three and
six months ended August 31, 2007 compared to the three and six months ended
August 31, 2006 was attributed to a decrease in occupancy in the Farmington, NM
office building. One tenant moved out during the quarter ended March 31, 2007,
which resulted in a reduction in real estate rental revenues of approximately
$885/month. We are presently performing renovations to the vacated space and
hope to have the space available for future rental by the end of the calendar
year.

The decrease in real estate rental revenues for the three and
six months ended August 31, 2006 compared to the three and six months ended
August 31, 2005 was due to a slight decrease in occupancy at the Farmington, NM
office building.

10-QSB 5<Page>

#### Costs and Expenses:

The following table presents a summary of Intermountain's
costs and expenses for the periods indicated:





|                                                      | Three Months Ended
|----------------------------------------------------- | ------------------
|                                                      | August 31, 2006   
|Cost of sales                                         | $    118,362      
|General and administrative costs                      | 67,413            
|Depletion, depreciation and amortization              | 14,496            
|Accretion of discount on asset retirement
obligations | 533               
|Salvage of refinery equipment                         | (11,141)          
|Interest and investment (income) loss, net            | (7,090)           
|Total costs and expenses                              | $  182,573        
|                                                      |                   
|                                                      | Six Months Ended  
|                                                      | August 31, 2006   
|Cost of sales                                         | $    191,007      
|General and administrative costs                      | 150,159           
|Depletion, depreciation and amortization              | 26,029            
|Accretion of discount on asset retirement
obligations | 1,066             
|Settlement of asset retirement obligations            | 7,112             
|Bad debt expense                                      | -                 
|Salvage of refinery equipment                         | (11,141)          
|Interest and investment income, net                   | (13,754)          
|Total costs and expenses                              | $  350,478        
|                                                      |                   



Changes in individual components of costs and expenses are
discussed below.

##### Cost of sales:

Cost of sales includes costs incurred in the production of oil
and natural gas and certain costs of maintaining the asphalt and refinery
facility.

The decrease in cost of sales for the six months ended August
31, 2007 compared to the six months ended August 31, 2006 consisted of a
$117,000 decrease in natural gas production costs. Costs associated with
maintaining the asphalt facility remained relatively unchanged. The reduction in
natural gas production costs consisted of a $4,000 decrease in New Mexico
natural gas production costs and a $114,000 reduction in costs associated with
the Kansas natural gas producing properties, which were sold on February 28,
2007. Well pump, production casing and tubing, and surface equipment failures
occur randomly and the timing and cost of repairs cannot be accurately
predicted. During the six months ended August 31, 2007, Intermountain incurred
approximately $27,000 in costs associated with repair claims made by the
purchaser of the Kansas properties in accordance with provisions of the sale
agreement and approximately $1,000 in costs associated with dewatering
operations on a replacement well completed in July 2007. It is believed that all
repair clams made by the purchaser have now been satisfied. The dewatering
operation associated with the replacement well in Kansas will continue until the
well develops sufficient pressure to produce saleable quantities of gas, or it
is determined that such cannot be accomplished. It is anticipated that
dewatering costs will be approximately $1,500 per month. There is no assurance
that dewatering efforts will be successful.

The decrease in cost of sales for the six months ended August
31, 2006 compared to the six months ended August 31, 2005 consisted of a $97,000
decrease in oil and natural gas production costs and a $1,500 decrease in
asphalt facility maintenance costs. The decrease in oil and natural gas
production costs consisted primarily of an $87,000 decrease in Kansas well
equipment repair costs along with the elimination of $9,000 in Nebraska crude
oil production costs. The Nebraska crude oil properties were sold in November
2005.

10-QSB 6<Page>

The decrease in costs of sales for the three months ended
August 31, 2007 compared to the three months ended August 31, 2006 consisted of
an $ 8,000 decrease in natural gas production costs. Costs associated with
maintaining the asphalt facility remained relatively unchanged. The reduction in
natural gas production costs consisted of a $2,000 decrease in New Mexico
natural gas production costs and an $86,000 reduction in costs associated with
the Kansas natural gas producing properties, which were sold on February 29,
2007.  During the three months ended August 31, 2007, Intermountain incurred
approximately $9,000 in costs associated with repair claims made by the
purchaser of the Kansas properties in accordance with provisions of the sale
agreement and approximately $1,000 in costs associated with dewatering
operations on  a replacement well completed in July 2007.

The decrease in cost of sales for the three months ended
August 31, 2006 compared to the three months ended August 31, 2005 consisted of
an $89,000 decrease in oil and natural gas production costs and a $1,400
decrease in asphalt facility maintenance costs. The decrease in oil and natural
gas production costs primarily consisted of an $80,000 decrease in Kansas well
equipment repair costs along with the elimination of $4,000 in Nebraska crude
oil production costs.

##### General and administrative expenses:

General and administrative expenses include the cost of
Intermountain's officers and administrative employees, costs incurred to operate
and maintain the Farmington office building, and all items of general overhead
required to manage and administer the corporate affairs of
Intermountain.

There were no significant changes in general and
administrative expenses during the three and six months ended August 31, 2007
compared to the three and six months ended August 31, 2006.

There were no significant changes in general and
administrative expenses during the three and six months ended August 31, 2006
compared to the three and six months ended August 31, 2005.

##### Depreciation and Depletion:

The decrease in depreciation and depletion costs during six
months ended August 31, 2007 compared to the six months ended August 31, 2006
consisted of a $6,000 decrease in New Mexico natural gas depletion and an $8,000
reduction in depletion due to the sale of the Kansas natural gas producing
properties. The Kansas properties were sold on February 28, 2007. The decrease
in depreciation and depletion costs during the three months ended August 31,
2007 compared to the three months ended August 31, 2006 consisted of a $4,500
decrease in New Mexico natural gas depletion and a $4,000 reduction in depletion
due to the sale of the Kansas properties

There were no significant changes in depreciation and
depletion costs during the three and six months ended August 31, 2006 compared
to the three and six months ended August 31, 2005.

##### Bad debt expense:

During the six months ended August 31, 2007, Intermountain
wrote off, as uncollectible,  $11,000 associated with a past due account which
arose from the prior salvage of portions of the equipment and metals salvaged
from the Fredonia refinery facility. The subject account was not related to
on-going operations.

##### Loss on settlement of asset retirement
obligations:

During the six months ended August 31, 2006, we recognized a
$7,100 loss on the settlement of asset retirement obligations associated with
the plugging and abandonment of one of our Kansas natural gas wells. At the time
of plugging, the present value of the well's estimated asset retirement
obligation was $2,700. The actual plugging cost for the well was
$9,800.

##### Salvage of refinery equipment:

During the six months ended August 31, 2007, Intermountain
sold, for cash, a piece of unused refinery equipment that was originally part of
the now dismantled refinery facility. The original cost of the equipment, net of
accumulated depreciation, had previously been fully impaired.

During the six months ended August 31, 2006, Intermountain
sold, on account, $11,000 of metals and equipment salvaged during the
dismantling of the refinery facility.

##### Interest and investment income (net):

Interest and investment income includes earnings on cash
balances and certificates of deposit, and net earnings on investments, less
interest expense incurred.

The increase in interest and investment income for the six
months ended August 31, 2007 compared to the six months ended August 31, 2006
consisted of a $21,000 increase in interest earned on cash balances, offset by a
$1,000 decrease in investment earnings (net of depletion on investments in oil
and gas royalty trusts). The increase in interest and investment income for the
three months ended August 31, 2007 compared to the three months ended August 31,
2006 consisted of a $9,000 increase in interest earned on cash balances.
Intermountain incurred no interest expense during either of the three and six
month periods.

10-QSB 7<Page>

The increase in interest and investment income for the six
months ended August 31, 2006 compared to the six months ended August 31, 2005
consisted of a $6,000 increase in interest earned on cash balances offset by a
$1,000 decrease in investment earnings (net of depletion on investments in oil
and gas royalty trusts). The increase in interest and investment income for the
three months ended August 31, 2006 compared to the three months ended August 31,
2005 consisted of a $3,000 increase in interest earned on cash balances offset
by an $800 decrease in investment earnings (net of depletion on investments in
oil and gas royalty trusts). Intermountain incurred no interest expense during
either of the three and six months periods.

### Inflation, Deflation and Changing Prices:

The results of operations and capital expenditures will
continue to be affected by inflation, deflation and changing prices. 
Prices of oil and natural gas could have a material effect on Intermountain's
operations.  Management is unable to determine the full impact of
inflation, deflation and changing prices on the results of operations or working
capital.

### Critical Accounting Estimates:

Certain accounting estimates are important to the presentation
of our financial condition and results of operations and require management's
subjective or complex judgments. Such estimates are subject to change based on
future conditions and events that may have a material effect on our financial
condition and results of operations. There have been no significant changes in
our assumptions or underlying factors that may adversely affect our previous
accounting estimates.

### Controls and Procedures

### Evaluation of Disclosure Controls and
Procedures:

Disclosure controls and procedures are designed and
implemented to insure that all material information relating to a company is
made known to its chief operating officer, chief financial officer, and such
other persons who are responsible for preparing and filing periodic reports with
the Securities and Exchange Commission. William N. Hagler and Rick L. Hurt,
representing all of the officers and directors of Intermountain, have evaluated
our disclosure controls and procedures and concluded that such controls were
effective as of August 31, 2007.

### Changes in Internal Controls:

There have been no significant changes in Intermountain's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of Management's last evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

### Legal Proceedings

We are not aware of any pending or threatened legal
proceedings to which Intermountain is a party. We are not aware of any pending
or threatened legal proceedings to which any director, officer, affiliate of
Intermountain, or any owner of more than 5% of Intermountain's common stock, is
an adverse party to, or has a material interest adverse to,
Intermountain.

### Submission of Matters to a Vote of Security Holders

There have been no matters submitted to a vote of security
holders during the three months ended August 31, 2007 through the solicitation
of proxies or otherwise.

### 

10-QSB 8<Page>

### 

### Financial Statements of Intermountain Refining Co., Inc.

### Index to Financial Statements



|                                                                                           | Page
|------------------------------------------------------------------------------------------ | ----
|                                                                                           |     
|Balance Sheet as of August 31,
2007                                                        | 10  
|                                                                                           |     
|Statements of Operations and
Comprehensive Income/Loss for the three and six month periods |     
|ended August 31,
2006 and August 31, 2007                                                  | 11  
|                                                                                           |     
|Statements of Cash Flows for the
six month periods ended                                   |     
|August 31, 2006
and August 31, 2007                                                        | 12  
|                                                                                           |     
|Notes to financial
statements                                                              | 13  
|                                                                                           |     

10-QSB 9<Page>



|Intermountain Refining Co., Inc.                                           |  |            
|-------------------------------------------------------------------------- |  | -----------
|Balance Sheet – Unaudited                                                  |  |            
|August 31, 2007                                                            |  |            
|                                                                           |  |            
|Assets                                                                     |  |            
|Current Assets                                                             |  |            
|Cash and cash equivalents                                                  |  | $ 1,981,717
|Accounts receivable                                                        |  | 35,109     
|Income tax refund receivable                                               |  | 18,573     
|Prepaid expenses                                                           |  | 4,694      
|Total Current Assets                                                       |  | 2,040,093  
|Property, Plant and
Equipment, net of valuation allowances                 |  |            
|Land, buildings and improvements                                           |  | 354,409    
|Equipment                                                                  |  | 45,990     
|Crude oil refining equipment                                               |  | 581,919    
|Oil and gas properties, (successful
efforts method) - Note B               |  | 657,133    
|                                                                           |  | 1,639,451  
|Less accumulated depletion and
depreciation                                |  | (1,037,307)
|                                                                           |  | 602,144    
|Other Assets                                                               |  |            
|Available-for-sale
investments                                             |  | 121,785    
|Other assets                                                               |  | 275        
|                                                                           |  | 122,060    
|Total Assets                                                               |  | $ 2,764,297
|                                                                           |  |            
|Liabilities and Stockholders' Equity                                       |  |            
|Current Liabilities                                                        |  |            
|Accounts payable                                                           |  | $     1,164
|Taxes other than income
taxes                                              |  | 2,659      
|Income taxes payable                                                       |  | -          
|Total Current
Liabilities                                                  |  | 3,823      
|Deferred
Taxes                                                             |  | 17,057     
|Asset Retirement Obligations                                               |  | 6,978      
|Commitments and
Contingencies                                              |  | -          
|Stockholders'
Equity                                                       |  |            
|Common stock, no par value, authorized
10,000,000 shares,                  |  |            
|issued and outstanding 1,155,609 shares                                    |  | 1,455,314  
|                                                                           |  |            
|Preferred stock, $0.01 par value, authorized 5,000,000
shares,             |  |            
|0 shares issued and outstanding.                                           |  | -          
|Retained earnings                                                          |  | 1,249,447  
|Accumulated other comprehensive gain                                       |  | 31,678     
|                                                                           |  | 2,736,439  
|Total Liabilities and Stockholders'
Equity                                 |  | $ 2,764,297
|                                                                           |  |            
|The accompanying notes are an integral part of these
financial statements. |  |            



10-QSB 10<Page>

|Intermountain Refining Co., Inc.                                                                                                                                                                                                                                                                      |                    |                  |             |              
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ---------------- | ----------- | -------------
|Statements of Operations and Comprehensive Income
(Loss)                                                                                                                                                                                                                                              |                    |                  |            
|                                                                                                                                                                                                                                                                                                      |                    |                  |             |              
|                                                                                                                                                                                                                                                                                                      | Three months ended | Six months ended
|                                                                                                                                                                                                                                                                                                      | August 31,         | August 31,       | August 31,  | August 31,   
|                                                                                                                                                                                                                                                                                                      | 2006               | 2007             | 2006        | 2007         
|                                                                                                                                                                                                                                                                                                      | (Unaudited)        | (Unaudited)      | (Unaudited) | (Unaudited)  
|Revenues                                                                                                                                                                                                                                                                                              |                    |                  |             |              
|Oil and natural gas production revenues                                                                                                                                                                                                                                                               | $   187,294        | $    37,917      | $   389,180 | $     76,438 
|Asphalt equipment rental and throughput
fees                                                                                                                                                                                                                                                          | 36,853             | 49,602           | 51,218      | 77,984       
|Real estate rental income                                                                                                                                                                                                                                                                             | 5,535              | 2,490            | 11,878      | 6,750        
|Other income                                                                                                                                                                                                                                                                                          | 750                | 750              | 1,500       | 1,500        
|                                                                                                                                                                                                                                                                                                      | 230,432            | 90,759           | 453,776     | 162,672      
|Costs and Expenses                                                                                                                                                                                                                                                                                    |                    |                  |             |              
|Cost of sales                                                                                                                                                                                                                                                                                         | 118,362            | 30,795           | 191,007     | 73,855       
|General and administrative                                                                                                                                                                                                                                                                            | 67,413             | 67,253           | 150,159     | 146,823      
|Depletion, depreciation and amortization                                                                                                                                                                                                                                                              | 14,496             | 5,827            | 26,029      | 11,317       
|Accretion of discount on asset retirement
obligations                                                                                                                                                                                                                                                 | 533                | 104              | 1,066       | 208          
|Loss on settlement of asset retirement
obligations                                                                                                                                                                                                                                                    | -                  | -                | 7,112       | -            
|Salvage of refinery equipment                                                                                                                                                                                                                                                                         | (11,141)           | -                | (11,141)    | (9,500)      
|Bad debt expense                                                                                                                                                                                                                                                                                      | -                  | -                | -           | 11,311       
|Interest and investment (income),
net                                                                                                                                                                                                                                                                 | (7,090)            | (16,167)         | (13,754)    | (33,709)     
|                                                                                                                                                                                                                                                                                                      | 182,573            | 87,812           | 350,478     | 200,305      
|Income (Loss) From Operations Before Income
Taxes                                                                                                                                                                                                                                                     | 47,859             | 2,947            | 103,298     | (37,633)     
|Provision (benefit) for income
taxes                                                                                                                                                                                                                                                                  |                    |                  |             |              
|Current                                                                                                                                                                                                                                                                                               | 2,800              | 291              | 2,800       | (14,038)     
|Deferred                                                                                                                                                                                                                                                                                              | -                  | -                | -           | -            
|                                                                                                                                                                                                                                                                                                      | 2,800              | 291              | 2,800       | (14,038)     
|Net Income (Loss)                                                                                                                                                                                                                                                                                     | 45,059             | 2,656            | 100,498     | (23,595)     
|                                                                                                                                                                                                                                                                                                      |                    |                  |             |              
|Other Comprehensive Income, net of tax:                                                                                                                                                                                                                                                               |                    |                  |             |              
|Unrealized gains (losses) on available for sale
securities:                                                                                                                                                                                                                                           |                    |                  |             |              
|Unrealized holding gains on investments available for sale
(net of deferred income tax (expense)/benefit of  $2,659 and $1,470 for the
three and six month periods ended August 31, 2007 respectively and $(1,534) and
$(162) for the three and six month periods ended August 31, 2006
respectively. | 2,850              | (4,937)          | 301         | (2,728)      
|                                                                                                                                                                                                                                                                                                      |                    |                  |             |              
|Comprehensive Income (Loss)                                                                                                                                                                                                                                                                           | $   47,909         | $   (2,281)      | $   100,799 | $    (26,323)
|                                                                                                                                                                                                                                                                                                      | =========          | =========        | =========   | =========    
|Weighted Average Number of Shares
Outstanding                                                                                                                                                                                                                                                         | 1,155,609          | 1,155,609        | 1,155,609   | 1,155,609    
|                                                                                                                                                                                                                                                                                                      |                    |                  |             |              
|Basic and Fully Diluted Earnings Per
Share                                                                                                                                                                                                                                                            |                    |                  |             |              
|Net income (loss)                                                                                                                                                                                                                                                                                     | $      
0.04       | $      
0.00     | $    
0.09  | $    
(0.02) 
|                                                                                                                                                                                                                                                                                                      | ========           | ========         | ========    | ========     
|The accompanying notes are an integral part of these
financial statements.                                                                                                                                                                                                                            |                    |                  |             |              

10-QSB 11<Page>



|Intermountain Refining Co.,
Inc.Statements of Cash Flows                                                                                                                                                                                                                                                                                                                                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                        
|Cash Flows From Operating Activities                                                                                                                                                                                                                                                                                                                                                    
|Net income (loss)                                                                                                                                                                                                                                                                                                                                                                       
|Adjustments to reconcile net loss to net
cash provided (used) by operating activities:                                                                                                                                                                                                                                                                                                  
|Depreciation, depletion and
amortization                                                                                                                                                                                                                                                                                                                                                
|Accretion of discount on asset retirement obligations                                                                                                                                                                                                                                                                                                                                   
|Loss on settlement of asset retirement
obligations                                                                                                                                                                                                                                                                                                                                      
|Depletion on investments in royalty trusts                                                                                                                                                                                                                                                                                                                                              
|Bad debt expense                                                                                                                                                                                                                                                                                                                                                                        
|Changes in operating assets and
liabilities:                                                                                                                                                                                                                                                                                                                                            
|Decrease in accounts
receivable                                                                                                                                                                                                                                                                                                                                                         
|Increase in prepaid expenses                                                                                                                                                                                                                                                                                                                                                            
|Decrease in accrued interest receivable                                                                                                                                                                                                                                                                                                                                                 
|Increase in income tax refund receivable                                                                                                                                                                                                                                                                                                                                                
|Increase/decrease in accounts
payable and accrued expenses                                                                                                                                                                                                                                                                                                                              
|(Increase) decrease in
income taxes payable                                                                                                                                                                                                                                                                                                                                             
|Net Cash Flow Provided/Used by Operating
Activities                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                        
|Cash Flows From Investing Activities                                                                                                                                                                                                                                                                                                                                                    
|Settlement of asset retirement obligations                                                                                                                                                                                                                                                                                                                                              
|Collection of notes receivable                                                                                                                                                                                                                                                                                                                                                          
|Purchases of available for sale
investments                                                                                                                                                                                                                                                                                                                                             
|Purchase of improvements to electric generation
equipment available for sale                                                                                                                                                                                                                                                                                                            
|Natural gas development costs - Note
B                                                                                                                                                                                                                                                                                                                                                  
|Net Cash Flow Used by Investing Activities                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                        
|Increase/Decrease in Cash and Cash
Equivalents                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                        
|Cash and Cash Equivalents at Beginning of
Year                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                        
|Cash and Cash Equivalents at End of
Period                                                                                                                                                                                                                                                                                                                                              
|Intermountain paid interest of $0 during the six month
period ended August 31, 2006.                                                                                                                                                                                                                                                                                                    
|Intermountain paid interest of $0 during the six month
period ended August 31, 2007.                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                        
|Intermountain paid income taxes of  $491 during the six
month period ended August 31, 2006.                                                                                                                                                                                                                                                                                             
|Intermountain paid income taxes of $191,600 during the six
month period ended August 31, 2007.                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                        
|Supplemental Schedule of Noncash Investing
Activities:During the six month period ended
August 31, 2006, Intermountain's available for sale investments increased in
value by $301, net of deferred taxes of $162.During
the six month period ended August 31, 2007, Intermountain's available for sale
investments decreased in value by $2,728, net of deferred tax credits of
$1,470.
|                                                                                                                                                                                                                                                                                                                                                                                        
|The accompanying notes are an integral part of these
financial statements.                                                                                                                                                                                                                                                                                                              



10-QSB 12<Page>

### Note A - Interim Financial Statements (Unaudited)

The accompanying balance sheet as of August 31, 2007 and the
statements of operations for the three and six month periods ended August 31,
2006 and August 31, 2007, and the statements of cash flows for the six month
periods ended August 31, 2006 and August 31, 2007 have been prepared by
Intermountain, without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and changes in cash at August 31,
2007, and for all periods presented, have been made.

It is suggested that these unaudited financial statements be
read in conjunction with the audited financial statements for the year ended
February 28, 2007. The results of operations for the six months ended August 31,
2007 are not necessarily indicative of the operating results for the full
year.

### Note B - Kansas Natural Gas Producing
Properties

Intermountain sold all of its interests in the Kansas natural
gas producing properties on February 28, 2007. As part of the sale agreement,
Intermountain is entitled to receive an additional $370,000 contingent upon
restoration of production from one gas unit that, due to a significant casing
failure, was not producing natural gas as of the date of sale. Intermountain
attempted additional repair efforts subsequent to February 28, 2007 and
ultimately decided to drill a replacement well on the unit. The replacement well
was completed in July 2007. Initial gas pressure at the wellhead was not
sufficient to produce saleable quantities of gas and Intermountain, at the
advise of its consultant, is presently attempting to dewater the producing
formation in an effort to raise gas pressure to saleable levels. During the
three month period ended May 31, 2007, Intermountain capitalized approximately
$217,000 in development costs associated with its efforts to restore production
from the gas unit. Management believes there is a reasonable probability that
production from the unit can be restored, however, there is no assurance that
the replacement well will be successful.

10-QSB 13<Page>

### Exhibits and Reports on Form 8-K

### Reports on Form 8-K:

There were no reports on Form 8-K filed by Intermountain
during the quarter ended August 31, 2007.

### Exhibits:





|Exhibit | Description                                                                                 
|------- | --------------------------------------------------------------------------------------------
|3.1     | Amended and Restated Articles of Incorporation
(1)                                          
|3.2     | Bylaws (1)                                                                                  
|10.5    | Paramount Petroleum Agreement (1)                                                           
|14.1    | Code of Ethics (2)                                                                          
|31.1    | Certification under Rule 13a-14(a)/15d-14(a) of Rick L.
Hurt, Secretary, Treasurer, Director
|31.2    | Certification under Rule 13a-14(a)/15d-14(a) of William N.
Hagler, President, Director      
|99.1    | Certification of Chief Executive Officer under Sec.906 of
Sarbanes-Oxley Act of 2002        
|99.2    | Certification of Chief Financial Officer under Sec.906 of
Sarbanes-Oxley Act of 2002        



(1) Incorporated herein by reference to Intermountain's
registration statement filed on Form S-1 dated April 9, 2001.

(2) Incorporated herein by reference to Intermountain's Form
10-KSB for the year ended February 28, 2006, as filed with the Commission on May
17, 2006.

### Signatures

Pursuant to the requirements of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Farmington, State of New
Mexico, on October 10, 2007.

Intermountain Refining Co., Inc.

By:/s/ William N.
HaglerWilliam N. Hagler, President

Pursuant to the requirements of the Exchange Act, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

/s/ William N.
Hagler_________________ Date: October 10,
2007William N. Hagler, Chairman of the Board
ofDirectors, and
President/s/ Rick
L. Hurt______________________ Date: October 10,
2007Rick L. Hurt, Secretary, Treasurer, Director



10-QSB 14<Page>