AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON

September 25, 2008

UNITED
STATESSECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, D.C. 
20549

### FORM 10-Q

(Mark One)

[  X ]          QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934For the quarterly period ended:August 31, 2008[   ]
TRANSITION REPORT PURSUANT TO 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.

(Exact name of registrant as specified 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 
87401(Address of principal executive
offices)(505)
326-2668(Registrant's telephone number,
including area code)

___________________________________________________________________________________________________

(Former name, former address and former fiscal
year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act
during the preceding 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____

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company, See definitions of "large accelerated filer", "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act.



Large accelerated filer ______
Accelerated filer ______Non-accelerated filer  ______ (Do not check if a smaller
reporting company)
Smaller reporting company ___X__


Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act) Yes ____ No
__X_

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

Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes_____ No _____

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
1,155,609 shares of common stock, no par value, were outstanding on September
25, 2008.

10-Q 1 <PAGE>

### Table of Contents





|       | Part I - Financial
Information                                                       | Page
|------ | ------------------------------------------------------------------------------------ | ----
|Item 1 | Financial Statements of Intermountain                                                | 3   
|Item 2 | Managements Discussion and Analysis of Financial Condition
and Results of Operations | 3   
|       | Intermountain's Business Activities                                                  | 3   
|       | Liquidity and Capital Resources                                                      | 3   
|       | Cash Requirements as of August 31, 2008                                              | 4   
|       | Results of Operations                                                                | 4   
|       | Inflation, Deflation and Changing Prices                                             | 8   
|       | Critical Accounting Estimates                                                        | 8   
|Item 4 | Controls and Procedures                                                              | 9   
|       | Part II - Other
Information                                                          |     
|Item 1 | Legal Proceedings                                                                    | 9   
|Item 4 | Submission of Matters to a Vote of Security
Holders                                  | 9   
|       | Index To Financial Statements                                                        | 9   
|Item 6 | Exhibits and Reports on Form 8-K                                                     | 14  

10-Q 2 <PAGE>

### Financial Statements of Intermountain

The financial statements of Intermountain as of August 31,
2008 and for the three and six month periods ended August 31, 2007 and August
31, 2008 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, 2008 and results of operations for the three and six month periods
ended August 31, 2007 and August 31, 2008, 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
- Leasing of asphalt paving products manufacturing and storage
facilities
- Other business activities including leasing unused space in
Intermountain's office building.

The asphalt
paving products manufacturing and storage facility was sold to an unrelated
third party in October 2007. However, Intermountain retained the benefits and
obligations associated with the lease agreement for the facility until December
31, 2010 or sooner at the sole discretion of Intermountain

### 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 or to enter into other lines of
business 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 29, 2008 | % Change | August 31, 2008
|------------------------- | ----------------- | -------- | ---------------
|Cash and cash equivalents | $  2,062,887      | (3)%     | $   2,002,988  
|                          |                   |          |                
|Working capital           | $  2,098,041      | 3%       | $   2,157,479  

During the six months ended August 31, 2008, Intermountain
realized a $66,000 decrease in cash from operating activities offset by a $6,000
increase in cash from non-operating activities. There were no significant or
unusual operating cash items during the period.

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.

10-Q 3 <PAGE>



### Cash requirements as of August 31,
2008:

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
- $15,000 estimated plugging and abandonment costs associated
with the unsuccessful Kansas natural gas well

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:

- $6,000 per month (net of production costs) from estimated
natural gas operations based on results of operations during the six months
ended August 31, 2008 along with projections of production and prices during the
next 12 months
- $1,100 per month from Farmington office space rental and
consulting services
- $3,300 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

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.

### 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, 2007   
|Revenues                       | $     90,759      
|Costs and Expenses             | 87,812            
|Net income (loss) before taxes | 2,947             
|Income tax expense (credit)    | 291               
|Net income (loss)              | $      2,656      
|                               |                   
|                               | Six months ended  
|                               | August 31, 2007   
|Revenues                       | $  162,672        
|Costs and expenses             | 200,305           
|Net loss before taxes          | (37,633)          
|Income tax credits             | (14,038)          
|Net loss                       | $   (23,595)      





#### Revenues:

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

10-Q 4<PAGE>



|                                             | Three months ended
|-------------------------------------------- | ------------------
|                                             | August 31, 2007   
|Natural gas production                       | $   37,917        
|Asphalt equipment rental and throughput fees | 49,602            
|Real estate rental                           | 2,490             
|Other revenues                               | 750               
|Total Revenues                               | $   90,759        
|                                             |                   
|                                             | Six months ended  
|                                             | August 31, 2007   
|Natural gas production                       | $    76,438       
|Asphalt equipment rental and throughput fees | 77,984            
|Real estate rental                           | 6,750             
|Other revenues                               | 1,500             
|Total Revenues                               | $  162,672        



Changes in individual components of revenues are discussed
below:



##### Natural gas revenues:

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

|                                | For the three months
ended | For the six months ended
|------------------------------- | -------------------------- | ------------------------
|                                | August 31, 2007            | August 31, 2008         
|Natural gas produced, net (Mcf) | 4,786                      | 4,807                   
|Average selling price ($/Mcf)   | $7.92                      | $11.46                  



The increase in natural gas revenues for the six months ended
August 31, 2008 compared to the six months ended August 31, 2007 consisted of a
$16,000 increase in New Mexico natural gas revenues which consisted of a 430 MCF
(5%) decrease in production offset by an average $2.27/MCF (27%) 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 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.

The increase in natural gas revenues for the three months
ended August 31, 2008 compared to the three months ended August 31, 2007
consisted of a $17,000 increase in New Mexico natural gas revenues which
consisted of a 21 MCF (0%) decrease in production offset by an average $3.54/MCF
(45%) increase in average selling prices.

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.

10-Q 5 <PAGE>

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

The decrease in asphalt equipment rental and throughput fees
for the three and six months ended August 31, 2008 compared to the three and six
months ended August 31, 2007 was attributed to an overall 3,084 (29%) decrease
in shipments of asphalt products from the facility.

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.

##### Real estate rental:

The increase in real estate rental revenues for the three and
six months ended August 31, 2008 compared to the three and six months ended
August 31, 2007 was attributed to a slight increase in occupancy in the
Farmington, NM office building.

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.

#### Costs and Expenses:

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





|                                                      | Three Months Ended
|----------------------------------------------------- | ------------------
|                                                      | August 31, 2007   
|Cost of sales                                         | $     30,795      
|General and administrative costs                      | 67,253            
|Depletion, depreciation and amortization              | 5,827             
|Accretion of discount on asset retirement
obligations | 104               
|Loss on write-off of unsuccessful well in
Kansas      | -                 
|Interest and investment income, net                   | (16,167)          
|Total costs and expenses                              | $   87,812        
|                                                      |                   
|                                                      | Six Months Ended  
|                                                      | August 31, 2007   
|Cost of sales                                         | $     73,855      
|General and administrative costs                      | 146,823           
|Depletion, depreciation and amortization              | 11,317            
|Accretion of discount on asset retirement
obligations | 208               
|Loss on write-off of unsuccessful well in
Kansas      | -                 
|Bad debt expense                                      | 11,311            
|Salvage of refinery equipment                         | (9,500)           
|Interest and investment income, net                   | (33,709)          
|Total costs and expenses                              | $  200,305        
|                                                      |                   



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

##### Cost of sales:

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

The increase in cost of sales for the six months ended August
31, 2008 compared to the six months ended August 31, 2007 consisted of a $2,500
increase in natural gas production costs and $500 increase in the asphalt
facility costs. The increase in natural gas production costs consisted of a
$29,000 increase in New Mexico natural gas production costs offset by a $26,000
decrease in costs associated with the Kansas natural gas producing properties,
which were sold in February 2007. The increase in New Mexico natural gas
production costs was mainly due to $22,000 incurred for a significant
recompletion of one well that resulted in an increase of production from the
unit, along with increases in gathering fees and production and severance taxes,
which are partially value based costs. Well pump, production casing and tubing,
and surface equipment failures occur randomly and the timing and cost of repairs
cannot be accurately predicted. The decrease in Kansas property costs was mainly
attributed to the elimination of $27,000 in repair claims incurred during the
prior year as part of completing the sale of the Kansas properties. During the
six months ended August 31, 2008, Intermountain incurred approximately $2,000 in
costs associated with dewatering operations on the replacement well completed in
July 2007. As discussed elsewhere in this report, Intermountain determined that
the dewatering operation was not successful and the previously capitalized
drilling and completion costs of the well were written off as of August 31,
2008. With the exception of plugging and abandonment costs associated with the
abandonment of the unsuccessful replacement well, estimates of which are
provided for under asset retirement obligations, future costs associated with
Kansas operations are not expected to be significant.

10-Q 6 <PAGE>

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. 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 the replacement well completed in July 2007.

The decrease in cost of sales for the three months ended
August 31, 2008 compared to the three months ended August 31, 2007 consisted of
a $1,000 decrease in natural gas production costs. The decrease in natural gas
production costs consisted of a $9,000 increase in costs associated with the New
Mexico properties offset by a $10,000 decrease in Kansas property costs, which
were sold in February 2007. The increase in Mew Mexico natural gas production
costs was mainly attributed to an increase in compression costs and increases in
gathering fees and production and severance taxes, which are partially value
based costs. The decrease in Kansas property costs were mainly associated with
the elimination of $9,000 in repair claims incurred during the prior year as
part of completing the sale of the Kansas properties. During the three months
ended August 31, 2008, Intermountain incurred approximately $600 in costs
associated with dewatering operations on the replacement well completed in July
2007.

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 the replacement well completed in July 2007.



##### 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, 2008
compared to the three and six months ended August 31, 2007.

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.



##### Depreciation and Depletion:

There were no significant changes in depreciation and
depletion costs during the three and six months ended August 31, 2008 compared
to the three and six months ended August 31, 2007.

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.

##### 10-Q 7 <PAGE>

##### 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 write-off of unsuccessful well in
Kansas:

In February 2007, Intermountain sold all of its Kansas natural
gas producing properties. At the time of the sale, one well was not producing
gas because of a significant casing failure. Under the terms of the sale
agreement, Intermountain was entitled to receive additional compensation if
production from the well was restored. After attempting repairs on the original
well, Intermountain drilled and completed a replacement well. The replacement
well however did not immediately develop sufficient wellhead pressure to produce
saleable quantities of gas. Intermountain's consultant theorized that the casing
leak on the original well had flooded the producing zone and that an extended
period of dewatering would eventually allow sufficient quantities of gas to flow
into the well. After performing dewatering operations for approximately one
year, water production had dropped significantly and had approached historical
water production levels observed prior to the casing leak. However, observed gas
pressures had not increased to historical levels and more significantly, open
flows of gas could not be sustained. Based on these observations,
Intermountain's consultant advised that the prolonged flooding of the producing
zone may have caused the natural gas to migrate away from the well bore and that
further attempts to stimulate production from the well would probably not be
successful. Accordingly, Intermountain decided to abandon its efforts to restore
production from the gas unit and, as of August 31, 2008, charged $233,515 to
expense representing the entire capitalized cost of the replacement well
including an additional $15,000 in estimated asset retirement costs provided for
the plugging and abandonment of the well. It is expected that the plugging and
abandonment of the well will be competed by December 31, 2008.

##### 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. The Fredonia
facility, including all of the remaining equipment located at the site, was sold
in October 2007.

##### 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 decrease in interest and investment income for the six
months ended August 31, 2008 compared to the six months ended August 31, 2007
consisted of a $15,000 decrease in interest earned on cash balances offset by a
$1,000 increase in investment earnings (net of depletion on investments in oil
and gas royalty trusts). The decrease in interest earned on cash balances was
attributed to a decrease in cash balances along with a decrease in money market
interest rates. The decrease in interest and investment income for the three
months ended August 31, 2008 compared to the three months ended August 31, 2007
consisted of an $8,000 decrease in interest earned on cash balances offset by a
$1,000 increase in investment earnings (net of depletion on investments in oil
and natural gas royalty trusts). Intermountain incurred approximately $300 in
interest expense during the six months ended August 31, 2008. Intermountain
incurred no interest expense during the three or six months ended August 31,
2007.

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.

### 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 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.

10-Q 8 <PAGE>

### 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, 2008.

### Changes in Internal Controls:

There has been no change in Intermountain's internal controls
over financial reporting during the last fiscal quarter covered by this report
that could materially affect, or is reasonably likely to materially affect,
Intermountain's internal control over financial reporting.

### 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, 2008 through the solicitation
of proxies or otherwise.

### Index to Financial Statements



|                                                                                           | Page
|------------------------------------------------------------------------------------------ | ----
|                                                                                           |     
|Balance Sheets as of February 29,
2008 and August 31, 2008                                 | 10  
|                                                                                           |     
|Statements of Operations and
Comprehensive Income/Loss for the three and six month periods |     
|ended August 31,
2007 and August 31, 2008                                                  | 11  
|                                                                                           |     
|Statements of Cash Flows for the
six month periods ended                                   |     
|August 31, 2007
and August 31, 2008                                                        | 12  
|                                                                                           |     
|Notes to financial
statements                                                              | 13  
|                                                                                           |     

10-Q 9 <PAGE>



|Intermountain Refining Co., Inc.                                           |               |             
|-------------------------------------------------------------------------- | ------------- | ------------
|Balance Sheet                                                              |               |             
|                                                                           | February 29,  | August 31,  
|                                                                           | 2008          | 2008        
|Assets                                                                     | (Audited)     | (Unaudited) 
|Current Assets                                                             |               |             
|Cash and cash equivalents                                                  | $   2,062,887 | $  2,002,988
|Accounts receivable                                                        | 13,051        | 38,005      
|Current portion of notes
receivable                                        | 15,731        | 13,183      
|Accrued interest receivable                                                | 685           | 131         
|Income tax refund receivable                                               | 11,468        | 103,848     
|Prepaid expenses                                                           | 939           | 5,826       
|Total Current Assets                                                       | 2,104,761     | 2,163,981   
|Property, Plant and
Equipment, net of valuation allowances                 |               |             
|Land, buildings and
improvements                                           | 343,057       | 343,057     
|Equipment                                                                  | 45,990        | 45,990      
|Asphalt equipment                                                          | 4,000         | 4,000       
|Natural gas properties, (successful
efforts method) - Note B               | 658,489       | 439,974     
|                                                                           | 1,051,536     | 833,021     
|Less accumulated depletion and
depreciation                                | (469,077)     | (479,478)   
|                                                                           | 582,459       | 353,543     
|Other Assets                                                               |               |             
|Available-for-sale
investments                                             | 136,508       | 139,141     
|Notes receivable, net of current
portion                                   | 23,223        | 16,360      
|Other assets                                                               | 275           | 275         
|Total Assets                                                               | 160,006       | 155,776     
|                                                                           | $ 2,847,226   | $ 2,673,300 
|Liabilities and Stockholders' Equity                                       |               |             
|Current Liabilities                                                        |               |             
|Accounts payable                                                           | $     4,002   | $     3,784 
|Taxes other than income
taxes                                              | 2,618         | 2,618       
|Income taxes payable                                                       | 100           | 100         
|Total Current
Liabilities                                                  | 6,720         | 6,502       
|Deferred
Taxes                                                             | 21,767        | 21,847      
|Asset Retirement Obligations                                               | 7,187         | 22,413      
|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     | 1,455,314   
|Preferred stock, $0.01 par value, authorized 5,000,000
shares,             |               |             
|no shares issued and outstanding.                                          | -             | -           
|Retained earnings                                                          | 1,315,813     | 1,126,651   
|Accumulated other comprehensive income                                     | 40,425        | 40,573      
|                                                                           | 2,811,552     | 2,622,538   
|Total Liabilities and Stockholders'
Equity                                 | $ 2,847,226   | $ 2,673,300 
|                                                                           |               |             
|The accompanying notes are an integral part of these
financial statements. |               |             

10-Q 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,  
|                                                                                                                                                                                                                                                                                                           | 2007               | 2008             | 2007          | 2008        
|                                                                                                                                                                                                                                                                                                           | (Unaudited)        | (Unaudited)      | (Unaudited)   | (Unaudited) 
|Revenues                                                                                                                                                                                                                                                                                                   |                    |                  |               |             
|Natural gas production revenues                                                                                                                                                                                                                                                                            | $    37,917        | $    55,068      | $     76,438  | $     92,740
|Asphalt equipment rental and throughput fees- Note
C                                                                                                                                                                                                                                                       | 49,602             | 45,093           | 77,984        | 61,023      
|Real estate rental income                                                                                                                                                                                                                                                                                  | 2,490              | 3,550            | 6,750         | 7,390       
|Other income                                                                                                                                                                                                                                                                                               | 750                | 750              | 1,500         | 1,500       
|                                                                                                                                                                                                                                                                                                           | 90,759             | 104,461          | 162,672       | 162,653     
|Costs and Expenses                                                                                                                                                                                                                                                                                         |                    |                  |               |             
|Cost of sales                                                                                                                                                                                                                                                                                              | 30,795             | 29,776           | 73,855        | 76,737      
|General and administrative                                                                                                                                                                                                                                                                                 | 67,253             | 63,886           | 146,823       | 143,235     
|Depletion, depreciation and amortization                                                                                                                                                                                                                                                                   | 5,827              | 5,704            | 11,317        | 10,401      
|Accretion of discount on asset retirement
obligations                                                                                                                                                                                                                                                      | 104                | 113              | 208           | 226         
|Loss on write-off of unsuccessful well in Kansas - Note
B                                                                                                                                                                                                                                                  | -                  | 233,515          | -             | 233,515     
|Salvage of refinery equipment                                                                                                                                                                                                                                                                              | -                  | -                | (9,500)       | -           
|Bad debt expense                                                                                                                                                                                                                                                                                           | -                  | -                | 11,311        | -           
|Interest and investment (income),
net                                                                                                                                                                                                                                                                      | (16,167)           | (9,392)          | (33,709)      | (20,019)    
|                                                                                                                                                                                                                                                                                                           | 87,812             | 323,602          | 200,305       | 444,095     
|Income (Loss) From Operations Before Income
Taxes                                                                                                                                                                                                                                                          | 2,947              | (219,141)        | (37,633)      | (281,442)   
|Provision (benefit) for income
taxes                                                                                                                                                                                                                                                                       |                    |                  |               |             
|Current                                                                                                                                                                                                                                                                                                    | 291                | (69,277)         | (14,038)      | (92,280)    
|Deferred                                                                                                                                                                                                                                                                                                   | -                  | -                | -             | -           
|                                                                                                                                                                                                                                                                                                           | 291                | (69,277)         | (14,038)      | (92,280)    
|Net Income (Loss)                                                                                                                                                                                                                                                                                          | 2,656              | (149,864)        | (23,595)      | (189,162)   
|                                                                                                                                                                                                                                                                                                           |                    |                  |               |             
|Other Comprehensive Income, net of tax:                                                                                                                                                                                                                                                                    |                    |                  |               |             
|Unrealized gains (losses) on available for sale
securities:                                                                                                                                                                                                                                                |                    |                  |               |             
|Unrealized holding gains (losses) on investments available
for sale (net of deferred income tax (expense)/benefit of $3,106 and $(80) for
the three and six month periods ended August 31, 2008 respectively and $2,659
and $1,470 for the three and six month periods ended August 31, 2007
respectively. | (4,937)            | (5,767)          | (2,728)       | 148         
|                                                                                                                                                                                                                                                                                                           |                    |                  |               |             
|Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                | $   (2,281)        | $   (155,631)    | $    (26,323) | $  (189,014)
|                                                                                                                                                                                                                                                                                                           | =========          | =========        | =========     | =========   
|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)                                                                                                                                                                                                                                                                                          | $      
0.00       | $      
(0.13)   | $    
(0.02)  | $    
(0.16)
|                                                                                                                                                                                                                                                                                                           | ========           | ========         | ========      | ========    
|The accompanying notes are an integral part of these
financial statements.                                                                                                                                                                                                                                 |                    |                  |               |             

10-Q 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 used by operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Depreciation, depletion and
amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Accretion of discount on asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Loss on write-off of unsuccessful
well in Kansas - Note B                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Depletion on investments in royalty trusts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Bad debt expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Changes in operating assets and
liabilities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(Increase)/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 Used by Operating
Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Cash Flows From Investing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Collection of notes receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Purchases of available for sale
investments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|Natural gas development costs - Note
B                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Net Cash Flow Provided/(Used) by Investing
Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|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, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Intermountain paid interest of $314 during the six month
period ended August 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Intermountain paid income taxes of $191,600 during the six
month period ended August 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Intermountain paid income taxes of $100 during the six month
period ended August 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Supplemental Schedule of Noncash Investing
Activities: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.During the six month period ended August 31,
2008, Intermountain's available for sale investments increased in value by $148,
net of deferred taxes of $80.During the six month
period ended August 31, 2008, Intermountain recorded $15,000 in estimated asset
retirement obligations for the expected plugging and abandonment of the
unsuccessful replacement well drilled in Kansas.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The accompanying notes are an integral part of these
financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

10-Q 12 <PAGE>

Intermountain Refining Co.,
Inc.Notes to Financial Statement - August 31,
2008

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

The accompanying balance sheet as of August 31, 2008 and the
statements of operations for the three and six month periods ended August 31,
2007 and August 31, 2008, and the statements of cash flows for the six month
periods ended August 31, 2007 and August 31, 2008 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,
2008, 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 29, 2008. The results of operations for the six months ended August 31,
2008 are not necessarily indicative of the operating results for the full
year.

### Note B - Kansas Natural Gas Producing
Properties

On February 28, 2007, Intermountain sold all of its interest
in the leases, wells and equipment associated with the natural gas producing
properties located in Scott and Finney Counties, Kansas. In accordance with the
sale price provisions of the sale agreement, Intermountain was entitled to
receive additional compensation of $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, which was completed in July 2007. The capitalized
development cost associated with the replacement well amounted to approximately
$219,000. Initial gas pressure at the wellhead was not sufficient to produce
saleable quantities and, at the advise of its consultant, Intermountain
attempted to dewater the producing formation in an effort to raise gas pressure.

In August 2008 and after discussions with its consultant,
management determined that dewatering efforts had not sufficiently improved gas
pressure at the wellhead and that additional efforts to stimulate the well would
probably fail to result in saleable gas volumes. Accordingly, Intermountain
decided that abandonment of the well was appropriate. As of August 31, 2008,
Intermountain capitalized an additional $15,000 in estimated asset retirement
obligations associated with the expected plugging and abandonment of the well
and wrote-off $233,515, representing the entire capitalized cost of the well. It
is expected that plugging and abandonment of the well will be completed prior to
December 31, 2008.

### Note C - Asphalt Product Storage
Services

Effective January 1, 2002, Intermountain leased its asphalt
storage and processing equipment to Paramount Petroleum Corporation for $3,200
per month plus a throughput fee of $5.50 per ton for asphalt products shipped
from the facility during the term of the agreement. In addition, if annual
product shipments from the facility exceed 10,000 tons, Paramount will pay an
additional throughput fee of $4.50 per ton, applicable to all tons shipped
during the year. The initial term of the agreement expired on January 1, 2003
but has been automatically extended on a year to year basis under the extension
terms of the agreement. The facility was sold to an unrelated third party on
October 18, 2007, however, the benefits and obligations under the lease
agreement were retained by Intermountain until December 31, 2010, or such
earlier time at the option of Intermountain.

10-Q 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, 2008.

### Exhibits:





|Exhibit | Description                                                                                 
|------- | --------------------------------------------------------------------------------------------
|3.1     | Amended and Restated Articles of Incorporation
(1)                                          
|3.2     | Bylaws (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      
|32      | Certification of Periodic Financial Report Pursuant to 18
U.S.C. Section 1350               



(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 September 25, 2008.

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: September 25,
2008William N. Hagler, Chairman of the Board
ofDirectors, and
President/s/ Rick
L. Hurt______________________ Date: September 25,
2008Rick L. Hurt, Secretary, Treasurer, Director

10-Q 14 <PAGE>