AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON



July 10, 2007



SECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, D.C.  20549

### FORM 10-QSB

(Mark One)

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



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



Commission file number:333-91191



### INTERMOUNTAIN REFINING CO., INC.

(Name of small business issuer in its
charter)



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



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

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes
_X_  No____

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,
2007.Transitional Small Business Disclosure
Format (Check One): Yes[ ] No [X]

10Q-SB 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, 2007                                                 | 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, 2007
and for the three month periods ended May 31, 2006 and May 31, 2007 are included
beginning on page 8 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, 2007 and results of operations for the three month periods ended May 31,
2006 and May 31, 2007, should be read in conjunction with our financial
statements and notes related thereto included elsewhere in this
report.

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

### Intermountain's Business Activities

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

- Production of natural gas
- 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:

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

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



|                          | February 28, 2007 | % Change | May 31,2007  
|------------------------- | ----------------- | -------- | -------------
|Cash and cash equivalents | $  2,391,302      | (9)%     | $  2, 166,538
|                          |                   |          |              
|Working capital           | $  2,266,766      | (9)%     | $  2,065,328 

During the three months ended May 31, 2007, Intermountain
realized a $47,000 decrease in cash from operating activities and a $178,000
decrease in cash from non-operating sources. There were no significant or
unusual operating cash items during the period.

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, 2007:

Estimated cash requirements for the next twelve months
include:

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

10-QSB 3 <Page>

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

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

- $5,000 per month (net of production costs) from estimated
natural gas operations based on results of operations during the three months
ended May 31, 2007 along with projections of production and prices during the
next 12 months
- $800 per month from Farmington office space
rental
- $6,800 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
2007 paving season.
- $370,000 of additional compensation from the sale of our
Kansas natural gas producing properties contingent on the successful return of
production from one of the Kansas gas units. During the three months ended May
31, 2007, Intermountain incurred approximately $180,000 associated with drilling
a replacement well on the unit. It is anticipated that the well will be
completed during the quarter ended August 31, 2007 for an additional cost of
approximately $40,000. There is no assurance that resumption of production from
the gas unit will be successful.

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

### 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, 2006      
|Revenues                       | $     223,344     
|Costs and expenses             | 167,905           
|Net income/(loss) before taxes | 55,439            
|Income taxes                   | -                 
|Net income/(Loss)              | $    55,439       



#### 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, 2006      
|Natural gas production                       | $     201,886     
|Asphalt equipment rental and throughput fees | 14,365            
|Real estate rental                           | 6,343             
|Other revenues                               | 750               
|Total Revenues                               | $    223,344      



Changes in individual components of revenues are discussed
below:

##### Natural gas revenues:

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

10-QSB 4 <Page>



|                                | For the three months
ended
|------------------------------- | --------------------------
|                                | May 31, 2006              
|Natural gas produced, net (Mcf) | 48,150                    
|Average selling price ($/Mcf)   | $4.19                     

The decrease in natural gas revenues for the three months
ended May 31, 2007 compared to the three months ended May 31, 2006 consisted of
a $6,500 decrease in New Mexico natural gas revenues and a $157,000 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 1,441
Mcf (25%) decrease in production offset by a $1.05/Mcf (14%) increase in average
selling prices. 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 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.

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

The increase in asphalt equipment rental and throughput fees
for the three months ended May 31, 2007 compared to the three month period ended
May 31, 2006 was attributed to a 2,550 ton increase in asphalt shipments from
the facility. While shipments from the facility have increased during the
current year as compared to the prior year, we continue to forecast that total
shipments from the facility will amount to approximately 10,000 tons during the
calendar 2007 paving season.

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.

##### Real estate rental:

The decrease in real estate rental revenues during the three
months ended May 31, 2007 compared to the three months ended May 31, 2006 was
attributed to a decrease in occupancy in the Farmington, NM office building. One
tenant moved out during the quarter ended May 31, 2007, which resulted in a
reduction in real estate rental revenues of approximately $885/month. We intend
to perform minor renovations on the vacated space before it will be made
available for future rental.

The increase in real estate rental revenues during the three
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.

#### Costs, Expenses, Investment Income and Other Gains and Losses
:

The following table presents a summary of Intermountain's
costs, expenses, investment income and other gains and looses for the periods
indicated:



|                                                      | Three Months Ended
|----------------------------------------------------- | ------------------
|                                                      | May 31, 2006      
|Cost of sales                                         | $    72,645       
|General and administrative costs                      | 82,745            
|Depletion, depreciation and amortization              | 11,533            
|Accretion of discount on asset retirement
obligations | 533               
|Bad debt expense                                      | -                 
|Loss on settlement of asset retirement
obligations    | 7,112             
|Salvage of refinery equipment                         | -                 
|Interest and investment income, net                   | (6,663)           
|Total costs and expenses                              | $ 167,905         

10-QSB 5 <Page>

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 normal costs of maintaining the asphalt facility.

The decrease in costs of sales for the three months ended May
31, 2007 compared to the three months ended May 31, 2006 consisted entirely of a
$30,000 decrease in natural gas production costs. The decrease in natural gas
production costs consisted of a $1,000 decrease in New Mexico natural gas
production costs and a $29,000 reduction in costs associated with the Kansas
natural gas producing properties, which were sold on February 28, 2007. Well
pump, production tubing and surface equipment failures occur randomly and the
timing and cost of repairs cannot be accurately predicted. During the three
months ended May 31, 2007, Intermountain incurred approximately $18,000 in costs
associated with repair claims made by the purchaser of the Kansas properties in
accordance with provisions of the sale agreement. Intermountain may incur some
additional costs associated with such repair claims in the next several months.
However, such additional costs are not expected to be significant.

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.

##### 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 was no significant change in general and administrative
expenses during the three months ended May 31, 2007 compared to the three months
ended May 31, 2006.

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

##### Depreciation and Depletion:

The decrease in depreciation and depletion expense for the
three months ended May 31, 2007 compared to the three months ended May 31, 2006
was attributed primarily reductions in depletion expense, including a $2,000
decrease in New Mexico depletion and a $4,000 decrease in Kansas depletion, The
Kansas natural gas properties were sold on February 28, 2007.

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.

##### Bad debt expense:

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

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

During the 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.

##### Salvage of refinery equipment:

During the three months ended May 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.

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, 2007 compared to the three months ended May 31, 2006
consisted of an $11,500 increase in interest earned on cash balances offset by a
$600 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, 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.

### 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, 2007.

### Changes in Internal Controls:

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

### Legal Proceedings

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

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

There have been no matters submitted to a vote of security
holders during the three months ended May 31, 2007 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,
2007                                                           | 9   
|                                                                                           |     
|Statements of Operations and
Comprehensive Income (Loss) for the three month periods ended |     
|May 31, 2006 and
May 31, 2007                                                              | 10  
|                                                                                           |     
|Statements of Cash Flows for the
three month periods ended                                 |     
|May 31, 2006 and
May 31, 2007                                                              | 11  
|                                                                                           |     
|Notes to financial
statements                                                              | 12  
|                                                                                           |     

10-QSB 8 <Page>



|Intermountain Refining Co., Inc.                                           |  |             
|-------------------------------------------------------------------------- |  | ------------
|Balance Sheet – Unaudited                                                  |  |             
|May 31, 2007                                                               |  |             
|                                                                           |  |             
|Assets                                                                     |  |             
|Current Assets                                                             |  |             
|Cash and cash equivalents                                                  |  | $  2,166,538
|Accounts receivable                                                        |  | 14,417      
|Notes receivable                                                           |  | 893         
|Accrued interest receivable                                                |  | 2           
|Income tax refund receivable                                               |  | 18,964      
|Prepaid expenses                                                           |  | 6,570       
|Total Current Assets                                                       |  | 2,207,384   
|Property, Plant and
Equipment, net of valuation allowances                 |  |             
|Land, buildings and
improvements                                           |  | 354,409     
|Equipment                                                                  |  | 45,990      
|Asphalt equipment                                                          |  | 581,919     
|Natural gas properties, (successful
efforts method) - Note B               |  | 620,148     
|                                                                           |  | 1,602,466   
|Less accumulated depletion and
depreciation                                |  | (1,031,480) 
|                                                                           |  | 570,986     
|Other Assets                                                               |  |             
|Available-for-sale
investments                                             |  | 128,721     
|Other assets                                                               |  | 275         
|                                                                           |  | 128,996     
|Total Assets                                                               |  | $ 2,907,366 
|Liabilities and Stockholders' Equity                                       |  |             
|Current Liabilities                                                        |  |             
|Accounts payable                                                           |  | $   139,310 
|Taxes other than income
taxes                                              |  | 2,646       
|Income taxes payable                                                       |  | 100         
|Total Current
Liabilities                                                  |  | 142,056     
|Deferred
Taxes                                                             |  | 19,716      
|Asset Retirement Obligations                                               |  | 6,874       
|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                                                          |  | 1,246,791   
|Accumulated other comprehensive income                                     |  | 36,615      
|                                                                           |  | 2,738,720   
|Total Liabilities and Stockholders'
Equity                                 |  | $ 2,907,366 
|                                                                           |  |             
|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,       
|                                                                                                                                                                                                              | 2006               | 2007          
|                                                                                                                                                                                                              | (Unaudited)        | (Unaudited)   
|Revenues                                                                                                                                                                                                      |                    |               
|Natural gas production revenues                                                                                                                                                                               | $  201,886         | $   38,521    
|Asphalt equipment rental and throughput
fees                                                                                                                                                                  | 14,365             | 28,382        
|Real estate rental income                                                                                                                                                                                     | 6,343              | 4,260         
|Other income                                                                                                                                                                                                  | 750                | 750           
|                                                                                                                                                                                                              | 223,344            | 71,913        
|Costs, Expenses Investment Income and Other Gains and
Losses                                                                                                                                                  |                    |               
|Cost of sales                                                                                                                                                                                                 | 72,645             | 43,060        
|General and administrative                                                                                                                                                                                    | 82,745             | 79,572        
|Depletion, depreciation and amortization                                                                                                                                                                      | 11,533             | 5,490         
|Accretion of discount on asset retirement
obligations                                                                                                                                                         | 533                | 104           
|Bad debt expense                                                                                                                                                                                              | -                  | 11,310        
|Salvage of refinery equipment                                                                                                                                                                                 | -                  | (9,500)       
|Loss on settlement of asset retirement
obligations                                                                                                                                                            | 7,112              | -             
|Interest and investment income,
net                                                                                                                                                                           | (6,663)            | (17,543)      
|                                                                                                                                                                                                              | 167,905            | 112,493       
|Income (Loss) From Operations Before Income
Taxes                                                                                                                                                             | 55,439             | (40,580)      
|                                                                                                                                                                                                              |                    |               
|Provision for income taxes                                                                                                                                                                                    |                    |               
|Current                                                                                                                                                                                                       | -                  | (14,329)      
|Deferred                                                                                                                                                                                                      | -                  | -             
|                                                                                                                                                                                                              | -                  | (14,326)      
|Net Income (Loss)                                                                                                                                                                                             | 55,439             | (26,251)      
|                                                                                                                                                                                                              |                    |               
|Other Comprehensive Loss, net of tax:                                                                                                                                                                         |                    |               
|Unrealized holding gain/(loss) on investments available for
sale (net of income tax (expense)/benefit of $1,372 for the three months ended
May 31, 2006 and $(1,189) for the three months ended May 31, 2007) | (2,549)            | 2,209         
|                                                                                                                                                                                                              |                    |               
|Comprehensive Income (Loss)                                                                                                                                                                                   | $     52,890       | $     (24,042)
|                                                                                                                                                                                                              | =========          | =========     
|Weighted Average Number of Shares
Outstanding                                                                                                                                                                 | 1,155,609          | 1,155,609     
|                                                                                                                                                                                                              |                    |               
|Basic and Fully Diluted Earnings Per
Share                                                                                                                                                                    |                    |               
|Net income (loss)                                                                                                                                                                                             | $     
0.05        | $     
(0.02) 
|                                                                                                                                                                                                              | ========           | ========      
|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:                                                                                                                                                                                                                                                                                                                                              
|Decrease in accounts
receivable                                                                                                                                                                                                                                                                                                                                                           
|Decrease in accrued interest receivable                                                                                                                                                                                                                                                                                                                                                   
|Increase in income tax refund receivable                                                                                                                                                                                                                                                                                                                                                  
|Increase in prepaid expenses                                                                                                                                                                                                                                                                                                                                                              
|Increase in accounts payable
and accrued expenses                                                                                                                                                                                                                                                                                                                                         
|Decrease in income taxes
accrued/receivable                                                                                                                                                                                                                                                                                                                                               
|Net Cash Flow Provided (Used) 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                                                                                                                                                                                                                                                                                                                                                            
|Natural gas development costs - Note
B                                                                                                                                                                                                                                                                                                                                                    
|Net Cash Flow Used by Investing Activities                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                          
|Increase (Decrease) in Cash and Cash
Equivalents                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                          
|Cash and Cash Equivalents at Beginning of
Year                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                          
|Cash and Cash Equivalents at End of
Period                                                                                                                                                                                                                                                                                                                                                
|Intermountain paid interest of $0 during the three month
period ended May 31, 2006.                                                                                                                                                                                                                                                                                                       
|Intermountain paid interest of $0 during the three month
period ended May 31, 2007.                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                          
|Intermountain paid income taxes of  $226 during the three
month period ended May 31, 2006.                                                                                                                                                                                                                                                                                                
|Intermountain paid income taxes of $191,000 during the three
month period ended May 31, 2007.                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                          
|Supplemental Schedule of Noncash Investing
Activities:During the three month period ended May
31, 2006, Intermountain's available for sale investments decreased in value by
$2,549, net of deferred tax credits of $1,372.During
the three month period ended May 31, 2007, Intermountain's available for sale
investments increased in value by $3,398, net of deferred taxes of $1,189.
|                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                          
|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, 2007 (Unaudited)

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

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

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

### Note B - Kansas Natural Gas Producing
Properties

Intermountain sold all of its interests in it Kansas natural
gas producing properties on February 28, 2007. As part of the sale agreement,
Intermountain is entitled to receive an additional $370,000 contingent upon
restoration of production from one gas unit that, due to a significant casing
failure, was not producing natural gas as of the date of sale. Intermountain
attempted additional repair efforts subsequent to February 28, 2007 and
ultimately decided to drill a replacement well on the unit. The replacement well
has been drilled and cased, but final completion is pending availability of a
completion rig. During the three month period ended May 31, 2007, Intermountain
capitalized approximately $180,000 in costs associated with its efforts to
restore production from the gas unit. It is estimated that Intermountain will
incur an additional $40,000 to complete the replacement well. Management
believes there is a reasonable probability that production from the unit can be
restored, however, there is no assurance that the replacement well will be
successful.

10-QSB 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, 2007.

### Exhibits:





|Exhibit | Description                                                                                 
|------- | --------------------------------------------------------------------------------------------
|3.1     | Amended and Restated Articles of Incorporation
(1)                                          
|3.2     | Bylaws (1)                                                                                  
|10.1    | Paramount Petroleum Agreement (1)                                                           
|14.1    | Code of Ethics (2)                                                                          
|31.1    | Certification under Rule 13a-14(a)/15d-14(a) of Rick L.
Hurt, Secretary, Treasurer, Director
|31.2    | Certification under Rule 13a-14(a)/15d-14(a) of William N.
Hagler, President, Director      
|99.1    | Certification of Chief Executive Officer under Sec. 906 of
Sarbanes-Oxley Act of 2002       
|99.2    | Certification of Chief Financial Officer under Sec. 906 of
Sarbanes-Oxley Act of 2002       

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

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

### Signatures

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

Intermountain Refining Co., Inc.

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

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

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

10-QSB 13 <Page>