AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON



July 14, 2006



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:May
31, 2006



[   ]           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____

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

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 June 30,
2006.Transitional Small Business Disclosure
Format (Check One): Yes[ ] No [X]

10-QSB 1<PAGE>

### Table of Contents





|                                                                                     | Page
|------------------------------------------------------------------------------------ | ----
|Financial Statements of Intermountain                                                | 3   
|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 May 31, 2006                                                 | 3   
|Results of Operations                                                                | 4   
|Inflation, Deflation and Changing Prices                                             | 7   
|Critical Accounting Estimates                                                        | 7   
|Controls and Procedures                                                              | 7   
|Legal Proceedings                                                                    | 7   
|Submission of Matters to a Vote of Security
Holders                                  | 7   
|Index To Financial Statements                                                        | 8   
|Exhibits and Reports on Form 8-K                                                     | 13  

10-QSB 2<PAGE>

### Financial Statements of Intermountain

The financial statements of Intermountain as of May 31, 2006
and for the three month periods ended May 31, 2005 and May 31, 2006 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 May
31, 2006 and results of operations for the three month periods ended May 31,
2005 and May 31, 2006, 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 (all crude oil producing properties
were sold in November 2005)
- 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

### Liquidity and Capital Resources:

Management believes that cash flow from ongoing operations
will be adequate to meet cash demands for the coming year.

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



|                          | February 28, 2006 | % Change | May 31,    2006
|------------------------- | ----------------- | -------- | ---------------
|Cash and cash equivalents | $     851,102     | 17%      | $     999,105  
|                          |                   |          |                
|Working capital           | $     996,963     | 6%       | $  1,058,219   

During the three months ended May 31, 2006, Intermountain
realized a $157,000 increase in cash from operating activities and a $9,000
decrease in cash from non-operating sources. There were no significant or
unusual operating cash items during the period.

### Cash requirements as of May 31, 2006:

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
- $1,000 estimated monthly costs associated with the ownership
and maintenance of our asphalt products 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:

- $38,000 per month (net of production costs) from estimated
oil and natural gas operations based on results of operations during the three
months ended May 31, 2006 along with projections of production and prices during
the next 12 months

10-QSB 3<PAGE>

- $1,900 per month from Farmington office space
rental
- $1,800 per month dividend and interest earned on cash
balances and 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
2006 paving season.
- $212,000 from the sale of our electric generation facility
(net of additional improvement costs) subject to successful completion of a
24-48 hour test run expected to be completed during 2006

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
|------------------------------------------------------- | ------------------
|                                                        | May 31, 2005      
|Revenues                                                | $     253,220     
|Costs and expenses (excluding asbestos abatement
costs) | 174,054           
|Asbestos abatement costs                                | 175,000           
|Net income/(loss) before taxes                          | (95,834)          
|Income taxes                                            | -                 
|Net income/(Loss)                                       | $    (95,834)     



#### 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
|-------------------------------------------- | ------------------
|                                             | May 31, 2005      
|Oil and gas production                       | $     212,501     
|Asphalt equipment rental and throughput fees | 31,084            
|Real estate rental                           | 6,135             
|Other revenues                               | 3,500             
|Total Revenues                               | $    253,220      



Changes in individual components of revenues are discussed
below:

##### Oil and Natural gas revenues:

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



|                                | For the three months ended
|------------------------------- | --------------------------
|                                | May 31,
2005              
|Natural gas produced, net (Mcf) | 47,470                    
|Average selling price ($/Mcf)   | $4.33                     
|Crude oil sold, net (Bbls)      | 138                       
|Average selling price ($/Bbl)   | $49.49                    

10-QSB 4<PAGE>

The decrease in oil and natural gas revenues for the three
months ended May 31, 2006 compared to the three months ended May 31, 2005
consisted of a $4,000 decrease in natural gas revenues and a $7,000 decrease in
crude oil revenues. The decrease in natural gas revenues consisted of a 680 Mcf
(1%) increase in natural gas produced offset by an average $0.14 $/Mcf (3%)
decrease in selling prices. Intermountain sold its Nebraska crude oil producing
properties in November 2005. Due to the complexity of the 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 increase in oil and natural gas revenues for the three
months ended May 31, 2005 as compared to the three months ended May 31, 2004
consisted of a $51,000 increase in natural gas revenues offset by a $2,000
decrease in crude oil revenues. The increase in natural gas revenues consisted
of a $3,000 increase in revenues from Kansas natural gas production plus the
addition of $48,000 from New Mexico natural gas production that was acquired in
August 2004. Kansas natural gas revenues consisted of a 9,600 Mcf (19%) decrease
in natural gas produced offset by an $0.82 per Mcf (27%) increase in selling
price. New Mexico natural gas revenues consisted of the production of 7,200 Mcf
at an average selling price of $6.64 per Mcf. The decrease in crude oil revenues
consisted of a 125 Bbl (48%) decrease in crude oil sold offset by a $15.98 per
Bbl (48%) increase in selling price.

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

The decrease in asphalt equipment rental and throughput fees
for the three months ended May 31, 2006 compared to the three months ended May
31, 2005 was attributed to a 2,600 ton reduction in asphalt shipments from the
facility. We had anticipated that asphalt product shipments would decline due to
a reduction in the amount of paving grade asphalt made available for sale from
the facility by Paramount. Accordingly, we have now downgraded our 2006 asphalt
product shipment projections from 15,000 tons to 10,000 tons. Shipments of
products from the facility are expected to increase during the summer paving
season.

The increase in asphalt equipment rental and throughput fees
for the three months ended May 31, 2005 as compared to the three months ended
May 31, 2004 was attributed to a slight increase in asphalt product shipments.

##### Real estate rental:

The increase in real estate rental revenues during the thee
months ended May 31, 2006 compared to the three months ended May 31, 2005
consisted of an average $69 per month increase due to a slight increase in
occupancy in the Farmington, NM office building. It is anticipated that real
estate rental revenues will remain relatively unchanged during the remainder of
the year.

The decrease in real estate rental revenues during the three
months ended May 31, 2005 compared to the three months ended May 31, 2004
consisted of an average $147 per month decrease primarily due to a slight
decrease in occupancy in the Farmington, NM office building.

#### Costs and Expenses:

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





|                                                      | Three Months Ended
|----------------------------------------------------- | ------------------
|                                                      | May 31, 2005      
|Cost of sales                                         | $    80,582       
|General and administrative costs                      | 83,657            
|Asbestos abatement obligations                        | 175,000           
|Depletion, depreciation and amortization              | 13,183            
|Accretion of discount on asset retirement
obligations | 671               
|Loss on settlement of asset retirement
obligations    | -                 
|Interest and investment income, net                   | (4,039)           
|Total costs and expenses                              | $ 349,054         
|                                                      |                   



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 normal costs of maintaining the asphalt facility.

10-QSB 5<PAGE>

The decrease in costs of sales for the three months ended May
31, 2006 compared to the three months ended May 31, 2005 consisted almost
entirely of an $8,000 reduction in oil and natural gas production costs. The
reduction in oil and natural gas production costs consisted of a $7,000
reduction in Kansas production costs, and the elimination of $5,000 in crude oil
production costs due to the November 2005 sale of the Nebraska properties,
offset by a $5,000 increase in New Mexico natural gas production costs. The
decrease in Kansas production costs was mainly attributed to a decrease in well
equipment repairs. The increase in New Mexico production costs was primarily
attributed to an increase in operating materials and well equipment repairs.
Well pump, production tubing and surface equipment failures occur randomly and
the timing and cost of repairs cannot be accurately predicted.

The increase in the cost of sales for the three months ended
May 31, 2005 compared to the three months ended May 31, 2004 consisted of a
$27,000 increase in oil and natural gas production costs offset by a $3,000
decrease in asphalt facility maintenance costs (excluding asbestos abatement
costs). The increase in oil and natural gas production costs consisted of a
$6,000 increase in Kansas natural gas production costs plus the addition of
$21,000 in production costs associated with the New Mexico natural gas
properties that were acquired in August 2004. Production costs associated with
Nebraska crude oil production were relatively unchanged. The increase in Kansas
production costs was primarily attributed to an $8,000 increase in well
equipment repair and maintenance supply 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.

The was no significant change in general and administrative
expenses during the thee months ended May 31, 2006 compared to the three months
ended May 31, 2005.

The increase in general and administrative expenses during the
three months ended May 31, 2005 compared to the three months ended May 31, 2004
consisted primarily of a $2,000 increase in group insurance and a slight
increase in all other cost categories.

##### Asbestos Abatement Obligation:

In April, 2005, we began the process of dismantling the
portions of our Fredonia refining equipment that were no longer used for ongoing
operations and were not expected to be used in the future. As part of the
process, the presence of asbestos containing materials was identified in
portions of the equipment. The abatement of asbestos containing materials at the
facility was substantially completed during the year ended February 28, 2006 and
we do not believe that we will incur any significant future costs associated
with asbestos abatement at the facility. We do anticipate that we will recover a
small amount from the salvage of metals from the equipment being dismantled and
we may incur some additional costs associated with normal debris removal. We are
hopeful that the dismantling process will be completed this summer.

During the three months ended May 31, 2005, Intermountain
recognized $175,000 for estimated asbestos abatement and disposal costs
associated with dismantling of the unused equipment at its Fredonia asphalt
facility. Actual expenses incurred for asbestos abatement activities during the
period amounted to $17,622.

##### Depreciation and Depletion:

The decrease in depreciation and depletion expense for the
three months ended May 31, 2006 compared to the three months ended May 31, 20005
was attributed to a slight decrease in natural gas production and the
elimination of $600 in depletion from the November, 2005 sale of the Nebraska
crude oil producing properties.

The increase in depreciation and depletion expense for the
three months ended May 31, 2005 compared to the three months ended May 31, 2004
consisted of a $7,000 increase in depletion on oil and gas production offset by
a $6,000 decrease in depreciation on asphalt facility equipment. The increase in
depletion expense was primarily due to the addition of the New Mexico natural
gas properties that were acquired in August 2004.

##### Accretion of discount and loss on settlement of asset
retirement obligations:

During the three months ended May 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.

10-QSB 6<PAGE>

##### 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 during the
three months ended May 31, 2006 compared to the three months ended may 31, 2005
consisted of a $2,800 increase in interest earned on cash balances offset by a
$200 decrease in investment earnings (net of depletion on investments in oil and
gas royalty trusts). Intermountain paid no interest expense during either of the
three month periods.

The increase in interest and investment income during the
three months ended May 31, 2005 compared to the three months ended May 31, 2004
consisted of a $500 increase in interest earned on cash balances plus a $2,100
increase in investment earnings. Intermountain paid no interest expense during
either of the three 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 materially adverse 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 ensure 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 May 31, 2006.

### 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 May 31, 2006 through the solicitation of
proxies or otherwise.

10-QSB 7<PAGE>

### Intermountain Refining Co., Inc.

### Index to Financial Statements



|                                                                                           | Page
|------------------------------------------------------------------------------------------ | ----
|                                                                                           |     
|Balance Sheet as of May 31,
2006                                                           | 9   
|                                                                                           |     
|Statements of Operations and
Comprehensive Income (Loss) for the three month periods ended |     
|May 31, 2005 and
May 31, 2006                                                              | 10  
|                                                                                           |     
|Statements of Cash Flows for the
three month periods ended                                 |     
|May 31, 2005 and
May 31, 2006                                                              | 11  
|                                                                                           |     
|Notes to financial
statements                                                              | 12  
|                                                                                           |     

10-QSB 8<PAGE>



|Intermountain Refining Co., Inc.                                           |  |            
|-------------------------------------------------------------------------- |  | -----------
|Balance Sheet – Unaudited                                                  |  |            
|May 31, 2006                                                               |  |            
|                                                                           |  |            
|Assets                                                                     |  |            
|Current Assets                                                             |  |            
|Cash and cash equivalents                                                  |  | $  999,105 
|Accounts receivable                                                        |  | 79,490     
|Notes receivable                                                           |  | 18,834     
|Accrued interest receivable                                                |  | 36         
|Prepaid expenses                                                           |  | 7,787      
|Total Current Assets                                                       |  | 1,105,252  
|Property, Plant and
Equipment, net of valuation allowances                 |  |            
|Land, buildings and
improvements                                           |  | 355,092    
|Equipment                                                                  |  | 45,990     
|Crude oil refining equipment                                               |  | 581,919    
|Oil and gas properties, (successful
efforts method)                        |  | 1,432,308  
|                                                                           |  | 2,415,309  
|Less accumulated depletion and
depreciation                                |  | (1,779,245)
|                                                                           |  | 636,064    
|Other Assets                                                               |  |            
|Electric generation equipment available for
sale                           |  | 215,007    
|Available-for-sale
investments                                             |  | 122,469    
|Other assets                                                               |  | 275        
|                                                                           |  | 337,751    
|Total Assets                                                               |  | $ 2,079,067
|Liabilities and Stockholders' Equity                                       |  |            
|Current Liabilities                                                        |  |            
|Accounts payable                                                           |  | $    44,351
|Taxes other than income
taxes                                              |  | 2,682      
|Income taxes payable                                                       |  | -          
|Total Current
Liabilities                                                  |  | 47,033     
|Deferred
Taxes                                                             |  | 18,366     
|Asset Retirement Obligations                                               |  | 30,203     
|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,             |  |            
|no shares issued and outstanding.                                          |  | -          
|Retained earnings                                                          |  | 494,043    
|Accumulated other comprehensive income                                     |  | 34,108     
|                                                                           |  | 1,983,465  
|Total Liabilities and Stockholders'
Equity                                 |  | $ 2,079,067
|                                                                           |  |            
|The accompanying notes are an integral part of these
financial statements. |  |            

10-QSB 9<PAGE>



|Intermountain Refining Co., Inc.                                                                                                                                                           |                    |             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------ | ------------
|Statements of Operations and Comprehensive
Loss                                                                                                                                            |                    |             
|                                                                                                                                                                                           |                    |             
|                                                                                                                                                                                           | Three months ended
|                                                                                                                                                                                           | May 31,            | May 31,     
|                                                                                                                                                                                           | 2005               | 2006        
|                                                                                                                                                                                           | (Unaudited)        | (Unaudited) 
|Revenues                                                                                                                                                                                   |                    |             
|Oil and natural gas production revenues - Note
B                                                                                                                                           | $  193,289         | $  201,886  
|Asphalt equipment rental and throughput
fees                                                                                                                                               | 31,084             | 14,365      
|Real estate rental income                                                                                                                                                                  | 6,135              | 6,343       
|Other income                                                                                                                                                                               | 3,500              | 750         
|                                                                                                                                                                                           | 234,008            | 223,344     
|Costs and Expenses                                                                                                                                                                         |                    |             
|Cost of sales - Note B                                                                                                                                                                     | 61,370             | 72,645      
|General and administrative                                                                                                                                                                 | 83,657             | 82,745      
|Asbestos abatement costs                                                                                                                                                                   | 175,000            | -           
|Depletion, depreciation and amortization                                                                                                                                                   | 13,183             | 11,533      
|Accretion of discount on asset retirement
obligations                                                                                                                                      | 671                | 533         
|Loss on settlement of asset retirement
obligations                                                                                                                                         | -                  | 7,112       
|Interest and investment income,
net                                                                                                                                                        | (4,039)            | (6,663)     
|                                                                                                                                                                                           | 329,842            | 167,905     
|Income (Loss) From Operations Before Income
Taxes                                                                                                                                          | (95,834)           | 55,439      
|                                                                                                                                                                                           |                    |             
|Provision for income taxes                                                                                                                                                                 |                    |             
|Current                                                                                                                                                                                    | -                  | -           
|Deferred                                                                                                                                                                                   | -                  | -           
|                                                                                                                                                                                           | -                  | -           
|Net Income (Loss)                                                                                                                                                                          | (95,834)           | 55,439      
|                                                                                                                                                                                           |                    |             
|Other Comprehensive Loss, net of tax:                                                                                                                                                      |                    |             
|Unrealized holding loss on investments available for sale
(net of income tax benefit of $2,046 for the three months ended May 31, 2005 and
$1,372 for the three months ended May 31, 2006) | (3,800)            | (2,549)     
|Reclassification adjustment for realized loss on sale of
investments available for sale net of deferred tax of $316                                                                        | -                  | -           
|                                                                                                                                                                                           |                    |             
|Comprehensive Income (Loss)                                                                                                                                                                | $     (99,634)     | $     52,890
|                                                                                                                                                                                           | =========          | =========   
|Weighted Average Number of Shares
Outstanding                                                                                                                                              | 1,155,609          | 1,155,609   
|                                                                                                                                                                                           |                    |             
|Basic and Fully Diluted Earnings Per
Share                                                                                                                                                 |                    |             
|Net income (loss)                                                                                                                                                                          | $     
(0.08)      | $     
0.05 
|                                                                                                                                                                                           | ========           | ========    
|The accompanying notes are an integral part of these
financial statements.                                                                                                                 |                    |             

10-QSB 10<PAGE>



|Intermountain Refining Co.,
Inc.Statements of Cash Flows                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                
|Cash Flows From Operating Activities                                                                                                                                                                                                                                                                                                                                                            
|Net income (loss)                                                                                                                                                                                                                                                                                                                                                                               
|Adjustments to reconcile net income
(loss) to net cash provided by operating activities:                                                                                                                                                                                                                                                                                                        
|Depreciation, depletion and
amortization                                                                                                                                                                                                                                                                                                                                                        
|Accretion of discount on asset retirement
obligations                                                                                                                                                                                                                                                                                                                                           
|Loss on settlement of asset retirement
obligations                                                                                                                                                                                                                                                                                                                                              
|Increase in asbestos abatement obligation                                                                                                                                                                                                                                                                                                                                                       
|Depletion on investments in royalty trusts                                                                                                                                                                                                                                                                                                                                                      
|Changes in operating assets and
liabilities:                                                                                                                                                                                                                                                                                                                                                    
|(Increase) decrease in
accounts receivable                                                                                                                                                                                                                                                                                                                                                      
|(Increase) decrease in accrued interest
receivable                                                                                                                                                                                                                                                                                                                                              
|Increase in prepaid expenses                                                                                                                                                                                                                                                                                                                                                                    
|Increase (decrease) in
accounts payable and accrued expenses                                                                                                                                                                                                                                                                                                                                    
|Decrease in income taxes
accrued/receivable                                                                                                                                                                                                                                                                                                                                                     
|Net Cash Flow Provided by Operating
Activities                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                
|Cash Flows From Investing Activities                                                                                                                                                                                                                                                                                                                                                            
|Settlement of asset retirement obligations                                                                                                                                                                                                                                                                                                                                                      
|Purchases of available for sale
investments                                                                                                                                                                                                                                                                                                                                                     
|Purchase of electric generation equipment
improvements                                                                                                                                                                                                                                                                                                                                          
|Collection of notes receivable                                                                                                                                                                                                                                                                                                                                                                  
|(Increase) decrease in cash value of life
insurance policies                                                                                                                                                                                                                                                                                                                                    
|Net Cash Flow Used by Investing Activities                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                
|Increase 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 three month
period ended May 31, 2005.                                                                                                                                                                                                                                                                                                             
|Intermountain paid interest of $0 during the three month
period ended May 31, 2006.                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                
|Intermountain paid income taxes of  $430 during the three
month period ended May 31, 2005.                                                                                                                                                                                                                                                                                                      
|Intermountain paid income taxes of $226 during the three
month period ended May 31, 2006.                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                
|Supplemental Schedule of Noncash Investing
Activities:During the three month period ended May
31, 2005, Intermountain's available for sale investments decreased in value by
$3,800, net of deferred tax credits of $2,046.During
the three month period ended May 31, 2005, Intermountain's available for sale
investments decreased in value by $2,549, net of deferred tax credits of $1,372.
|                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                
|The accompanying notes are an integral part of these
financial statements.                                                                                                                                                                                                                                                                                                                      

10-QSB 11<PAGE>

Intermountain Refining Co., Inc.

Notes to Financial Statements

May 31,2004 Unaudited

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

The accompanying balance sheet as of May 31, 2006 and the
statements of operations for the three month periods ended May 31, 2005 and May
31, 2006, and the statements of cash flows for the three month periods ended May
31, 2005 and May 31, 2006 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 May 31, 2006, 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, 2006. The results of operations for the three months ended May 31,
2006 are not necessarily indicative of the operating results for the full
year.

### Note B - Reclassifications

Oil and natural gas revenues and Costs of sales presented in
the Statement of Operations and Comprehensive Loss for the three month period
ended May 31, 2005 have been restated from the prior year presentation to
reflect the reclassification of production taxes and gathering costs that were
previously included as reductions of gross revenues. The amounts were
reclassified to allow for comparability with the current year presentation.

10-QSB 12<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 May 31, 2006.

### Exhibits:





|Exhibit | Description                                                                                 
|------- | --------------------------------------------------------------------------------------------
|3.1     | Amended and Restated Articles of Incorporation
(1)                                          
|3.2     | Bylaws (1)                                                                                  
|10.1    | Oneok / Kinder Morgan / KN Energy Gas Sales Agreement
(1)                                   
|10.2    | Paramount Petroleum Agreement (1)                                                           
|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.

### 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 July 14, 2006.

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: July 14,
2006William N. Hagler, Chairman of the Board
ofDirectors, and
President/s/ Rick
L. Hurt ____________________   Date: July 14,
2006Rick L. Hurt, Secretary, Treasurer, Director

10-QSB 13<PAGE>