RANCHER
      ENERGY CORP.

    


    December
      21, 2006

    Rancher
      Energy Corp.

    999-18th
      Street,
      Suite 1740

    Denver,
      Colorado 80202

    


    


    
      	
            	Re:	
              Rancher
                Energy Corp. - Lock-Up
                Agreement

            


    

    


    Dear
      Sirs:

    


    This
      Lock-Up Agreement is being delivered to you in connection with the Securities
      Purchase Agreement (the "Purchase
      Agreement"),
      dated
      as of December 21, 2006 by and among Rancher Energy Corp. (the
      "Company")
      and
      the investors party thereto (the "Buyers"),
      with
      respect to the issuance of (i) convertible notes of the Company (the
      "Notes")
      which
      Notes shall be convertible into the common stock, par value $0.00001 per share,
      of the Company (the "Common
      Stock")
      (ii)
      shares of Common Stock and (iii) warrants to acquire additional shares of Common
      Stock.
      Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Purchase Agreement.

    


    In
      order
      to induce you to enter into the Purchase Agreement, the undersigned agrees
      that
commencing
      on the date hereof and ending on the later of (i) the date 180 days from the
      Closing Date (as defined in the Purchase Agreement) and (ii) the
      date
      the
      Initial Registration Statement (as defined in the Registration Rights Agreement)
      filed by the Company pursuant to the Registration Rights Agreement is declared
      effective by the United States Securities and Exchange Commission,
      but in
      no event later than the one year anniversary of the Closing Date (the
      "Lock-Up
      Period"),
      the
      undersigned will not, without the written consent of the Required Holders (as
      defined in the Registration Rights Agreement), (i)
      sell,
      offer to sell, contract or agree to sell, hypothecate, hedge, pledge, grant
      any
      option to purchase,
      make any
      short sale
      or
      otherwise dispose of or agree to dispose of, directly or indirectly,
      any
      shares
      of Common Stock, owned directly by the undersigned (including holding as a
      custodian) or with respect to which the undersigned has beneficial ownership
      within the rules and regulations of the Securities and Exchange
      Commission,
      or (ii)
      enter into any swap or other arrangement that transfers to another, in whole
      or
      in part, any of the economic consequences of ownership of any
      shares of Common Stock, owned directly by the undersigned (including holding
      as
      a custodian) or with respect to which the undersigned has beneficial ownership
      within the rules and regulations of the Securities and Exchange
      Commission,
      whether
      any such transaction is to be settled by delivery of such securities, in cash
      or
      otherwise, (collectively, the "Undersigned’s
      Shares").
      This
      Lock-Up Agreement shall not apply to any shares of Common Stock acquired by
      the
      undersigned on the open market or otherwise after the Closing Date.

    


    The
      foregoing restriction is expressly agreed to preclude the undersigned or any
      affiliate of the undersigned from engaging in, without the written consent
      of
      the Required Holders, any hedging or other transaction which is designed to
      or
      which reasonably could be expected to lead to or result in a sale or disposition
      of the Undersigned’s Shares even if the Undersigned’s Shares would be disposed
      of by someone other than the undersigned. Such prohibited hedging or other
      transactions would include, without limitation, any short sale or any purchase,
      sale or grant of any right (including, without limitation, any put or call
      option) with respect to any of the Undersigned’s Shares or with respect to any
      security that includes, relates to, or derives any significant part of its
      value
      from the Undersigned’s Shares.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    Notwithstanding
      the foregoing, the undersigned may transfer the Undersigned’s Shares (i) as a
bona
      fide
      gift or
      gifts, provided that the donee or donees thereof agree to be bound in writing
      by
      the restrictions set forth herein or (ii) to any trust for the direct or
      indirect benefit of the undersigned or the immediate family of the undersigned,
      provided that the trustee of the trust agrees to be bound in writing by the
      restrictions set forth herein, and provided further that any such transfer
      shall
      not involve a disposition for value. For purposes of this Lock-Up Agreement,
      “immediate family” shall mean any relationship by blood, marriage or adoption,
      not more remote than first cousin. The undersigned now has, and, except as
      contemplated by clauses (i) and (ii) above, for the duration of this Lock-Up
      Agreement will have, good and marketable title to the Undersigned’s Shares, free
      and clear of all liens, encumbrances, and claims whatsoever. The undersigned
      also agrees and consents to the entry of stop transfer instructions with the
      Company’s transfer agent and registrar against the transfer of the Undersigned’s
      Shares except in compliance with the foregoing restrictions.

    


    The
      undersigned understands and agrees that this Lock-Up Agreement is irrevocable
      and shall be binding upon the undersigned’s heirs, legal representatives,
      successors, and assigns.

    


    This
      Lock-Up Agreement may be executed in two counterparts, each of which shall
      be
      deemed an original but both of which shall be considered one and the same
      instrument.

    


    This
      Lock-Up Agreement will be governed by and construed in accordance with the
      laws
      of the State of New York, without giving effect to any choice of law or
      conflicting provision or rule (whether of the State of New York, or any other
      jurisdiction) that would cause the laws of any jurisdiction other than the
      State
      of New York to be applied. In furtherance of the foregoing, the internal laws
      of
      the State of New York will control the interpretation and construction of this
      Lock-Up Agreement, even if under such jurisdiction's choice of law or conflict
      of law analysis, the substantive law of some other jurisdiction would ordinarily
      apply.

    


    The
      Buyers shall be intended third party beneficiaries of this Agreement to the
      same
      extent as if they were parties hereto, and shall be entitled to enforce the
      provisions hereof. No provision of this Agreement may be amended or waived
      without the written consent of the Required Holders.

    


    [Signature
      Page Follows]

    
       

      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 	
              Very
                truly yours,

               

              ________________________________________

              Exact
                Name of Stockholder

               

              ________________________________________

              Authorized
                Signature

               

              ________________________________________

              Title

            


    

    


    Agreed
      to
      and Acknowledged:

    


    RANCHER
      ENERGY CORP.

    


    


    By:
      _______________________

    Name:
      John Works

    Title:
      President and Chief Executive Officer