EXHIBIT 10.1

    


    SPECIFIC
TERMS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST TO THE SECURITIES
AND EXCHANGE COMMISSION.  THE OMITTED INFORMATION HAS BEEN SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.  THE OMITTED TERMS
HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

    


     

    ASSIGNMENT
AGREEMENT

     

    THIS
ASSIGNMENT AGREEMENT (this “Agreement”) is made effective as of March 1, 2009
(the “Effective
Date”), by and between RANCHER ENERGY CORP., a Nevada corporation (“Assignor” or
“Rancher”), and MERIT ENERGY COMPANY, LLC, a Delaware limited liability company
(“Assignee” or
“Merit”).

     

    WHEREAS,
as of the Effective Date, Assignor holds all right, title and interest, powers
and privileges in and to that certain Carbon Dioxide Sale & Purchase
Agreement dated as of February 1, 2008 by and between ExxonMobil Gas & Power
Marketing Company (a division of ExxonMobil corporation) (“Exxon”), as seller,
and Rancher Energy Corp., as buyer (the “Contract”;
capitalized terms used but not otherwise defined herein shall have the same
meanings ascribed to such terms in the Contract), which governs Exxon’s
agreement to sell, and Assignor’s agreement to purchase, certain quantities of
Carbon Dioxide;

     

    WHEREAS,
Assignor wishes to assign to Assignee, and Assignee wishes to assume, that
portion of Assignor’s right, title and interest in and to the Contract as it
relates solely to Assignor’s right to purchase from Exxon and obligations
related thereto, a Daily Contract Quantity of thirty-seven and one-half (37.5)
MMCF per day of Carbon Dioxide during the Initial
Merit Term (as hereinafter defined), (collectively, the “Assigned Interests”);
and

     

    WHEREAS,
Assignor also wishes to grant to Assignee, and Assignee wishes to receive, an
option to purchase a portion of the Carbon Dioxide to which Assignor is
otherwise entitled or obligated to purchase under the Contract.

     

    NOW,
THEREFORE, for One Hundred Dollars ($100.00) and other good and valuable
consideration including without limitation the mutual promises exchanged herein,
the receipt and sufficiency of all of which are hereby acknowledged, the parties
hereto agree as follows:

     

    
      
        	 	      
                1.

              	Term
      Assignment and Assumption:
	 	 	 
	
                 
      

              	
                (a)

              	
                As
      of the Effective Date, Assignor hereby TRANSFERS, CONVEYS, SELLS and
      ASSIGNS to Assignee all of its right, title and interest in and to the
      Assigned Interests, together with every right, privilege, and appurtenance
      relating to the Assigned Interests, free and clear of all liens and
      encumbrances arising by, through or under Assignor (the “Term
      Assignment”).  The Initial Merit Term is hereby defined as the
      period beginning on the Start-Up Date and continuing for two years
      thereafter.

              


      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (b)

            	
              Assignor
      and Assignee agree that this Agreement shall have the effect of creating
      two (2) contracts with Exxon that are separately performable and
      separately terminable.  Assignor and Assignee agree that the
      parties shall perform under the Contract as two (2) separate and distinct
      contracts, one as between Assignee and Exxon with respect to the Assigned
      Interests (the “Merit Contract”) and one as between Assignor and Exxon
      with respect to Assignor’s remaining rights under the Contract (subject to
      Assignee’s other rights hereunder, including the Options (as defined
      herein)).  For sake of clarity, in the event Assignee terminates
      the Merit Contract in accordance with the Assumption, Assignee shall have
      no obligation to purchase any Carbon Dioxide from Assignor, but shall
      retain the Options and such other rights as may exist under this Agreement
      (including, without limitation, those rights under Section
      2(h)).

            


    

    


    
      	
               
      

            	
              (c)

            	
              During
      the Initial Merit Term, Assignee hereby affirmatively and unconditionally
      assumes all of the obligations of Assignor under or by virtue of the
      Assigned Interests arising from and after the Effective
    Date.

            


    

     

    
      	
               
      

            	
              (d)

            	
              Assignee
      hereby agrees to pay to Assignor an amount equal to (**) per MCF of Carbon
      Dioxide for which Assignee is required to pay Exxon as a result of this
      Assignment; provided, however, for the sake of clarity, this fee paid by
      Assignee to Assignor shall not apply to (i) Make-Up Volumes, (ii) volumes
      not meeting Quality Specifications, (iii) volumes for which Assignee is
      not obligated to pay Exxon under the Contract, or (iv) to the extent Merit
      terminates the Merit Contract in accordance with the
      Assumption.  Payments by Assignee shall be made to Assignor
      monthly on or before the end of the month following the month in which
      volumes were paid for by Assignee to
Exxon.

            


    

     

    
      	
               
      

            	
              (e)

            	
              Assignee
      agrees to indemnify and hold the Assignor Indemnified Parties (as defined
      below) harmless from and against any and all claims, demands and causes of
      action of any kind and all losses, damages, liabilities, costs and
      expenses of whatever nature (including court costs and reasonable
      attorneys’ fees) (collectively, “Claims”)
      arising out of, or incident to, or occurring in connection with or
      relating to the Assigned Interests during the Initial Merit Term,
      including, without limitation, any non-compliance by Assignee with the
      terms and conditions of the Contract during the Initial Merit Term, but
      only insofar as such Claims pertain to the Assigned
      Interests.  As used herein, the “Assignor Indemnified
      Parties” shall mean Assignor and its successors, permitted assigns,
      and their respective affiliates, subsidiaries, shareholders, members,
      partners, officers, directors, employees, and
  agents.

            


    

     

    
      	
               
      

            	
              (f)

            	
              Assignor
      agrees to indemnify, defend, and hold the Assignee Indemnified Parties (as
      defined below) harmless from and against any and all Claims arising out
      of, or incident to, or occurring in connection with or relating to the
      Assigned Interests prior to the Effective Date and after the expiration of
      the Initial Merit Term and any additional Merit Terms, including without
      limitation, any non-compliance by Assignor with the terms and conditions
      of the Contract prior to the Effective Date.  As used herein,
      the “Assignee
      Indemnified Parties” shall mean Assignee and its successors,
      permitted assigns, and their respective affiliates, subsidiaries,
      shareholders, members, partners, officers, directors, employees, and
      agents.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (g)

            	
              Assignor,
      Assignee and Exxon (by virtue of its consent hereto) each acknowledge and
      agree that Assignee is accepting and assuming the Assigned Interests and
      only those rights and obligations under the Contract which are essential
      to give effect to the Assigned Interests conveyed to Assignee hereby
      during the Initial Merit Term, including,
      but not limited to, Merit’s compliance with a Proportionate Share of any
      Performance Assurances and,
      except as otherwise expressly provided herein, all other rights,
      privileges, obligations and liabilities of Assignor arising under or by
      virtue of the Contract (the “Retained Exxon Agreement”) shall remain with
      Assignor and are expressly not accepted or assumed by
      Assignee.  Assignor agrees to indemnify, defend, and hold the
      Assignee Indemnified Parties harmless from and against any and all Claims
      arising out of, or incident to, or occurring in connection with or
      relating to the Retained Exxon Agreement, whether arising prior to or from
      and after the Effective Date.

            


    

     

    
      
        	 	      
                2.

              	Option
      to Purchase:
	 	 	 
	
                 
      

              	
                (a)

              	
                During
      the Initial Merit Term, Merit shall have the option, in its sole
      discretion, to purchase from Rancher an additional six and one half (6.5)
      MMCF per day of CO2 (the “First Option”).  Merit shall exercise
      the First Option by providing written notice to Rancher of the amount of
      additional CO2 it desires to purchase pursuant to its option at least
      fifteen (15) days prior to the beginning of the month in which such
      additional volumes are to be delivered.  Any election by Merit
      to purchase additional CO2 pursuant to the First Option hereunder shall be
      deemed to continue month to month until Merit provides written notice to
      Rancher of any change at least fifteen (15) days prior to the beginning of
      the calendar month in which such change is to be
  effective.

              


      

    

     

    
      	
               
      

            	
              (b)

            	
              During
      the Term of the Contract with respect
      to  the Retained Exxon Agreement, but after the Initial Merit
      Term, to the extent Rancher is not using for its own tertiary recovery
      purposes any volumes of CO2 Rancher is otherwise obligated, or able, to
      purchase from Exxon under the Contract (“Excess Volumes”), Merit shall
      have the option, in its sole discretion, to purchase from Rancher so much
      of such Excess Volumes as is elected by Merit (the “Second Option,” and,
      together with the First Option, the “Options”).  Merit shall
      make any such election to purchase such Excess Volumes monthly (each, an
      “Additional Merit Term”) by providing written notice of its election at
      least fifteen (15) days prior to the beginning of such Additional Merit
      Term.  Merit’s election for the prior month shall continue month
      to month unless Merit otherwise notifies Rancher in writing at least fifteen (15) days before the end of a
      month of a change in such election.  Such election under
      the Second Option shall include the amount of such Excess Volumes Merit
      desires to purchase.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (c)

            	
              Any
      CO2 purchased by Merit from Rancher under the Options shall be purchased
      at a price equal to (**) per MCF (the “Merit Price”).  Rancher
      shall invoice Merit monthly for any amounts owed to Rancher pursuant to an
      exercise of the Options and Merit shall remit any undisputed amounts owed
      by the later of (i) the fifteenth (15th)
      day of the month following delivery of such invoice or (ii) seven (7) days
      of receipt of such invoice by Merit.  Merit shall make payments by wire
      transfer to an account specified by Rancher.  Merit shall
      notify Rancher of any disputes within twenty (20) days of receiving such
      invoice.  All invoices provided by Rancher to Merit shall
      contain the quantities sold, the Contract Prices paid by Rancher, and any
      other information reasonably requested by Merit from time to
      time.  In the event Merit does not timely pay any undisputed
      amounts due hereunder, Merit shall be subject to the same obligations as
      would be imposed on Rancher for late payment under the Retained Exxon
      Agreement (including, without limitation, interest payments and the
      cessation of deliveries under Section 5.3 of the Exxon
      Agreement).  Except as otherwise provided in the Retained Exxon
      Agreement, failure to timely make payments by Merit shall not constitute a
      basis for the termination of the
Options.

            


    

     

    
      	
               
      

            	
              (d)

            	
              All
      CO2 purchased by Merit from Rancher under the Options shall be delivered
      by Rancher to Merit at the existing flange connection between the
      ExxonMobil Carbon Dioxide Pipeline at mile post 112 and the Merit Carbon
      Dioxide pipeline near Baroil, Fremont County, Wyoming, and will meet the
      same Quality Specifications as when acquired by Rancher under the Retained
      Exxon Agreement.

            


    

     

    
      	
               
      

            	
              (e)

            	
              In
      the event it exercises one or both of the First Option and/or Second
      Option, Merit hereby agrees to reimburse Rancher for Merit’s Proportionate
      Share of (i) any reasonable third-party expenses incurred by Rancher in
      connection with any performance obligations imposed on Rancher under the
      Retained Exxon Agreement with respect to volumes taken pursuant to the
      Options, and (ii) any additional fees charged by Exxon under the Retained
      Exxon Agreement not already included in the Contract Price with respect to
      volumes taken pursuant to the Options, and
      shall comply with its Proportionate Share of any Performance Assurances
      (provided that nothing in this Agreement shall be construed to require
      Merit to reimburse Rancher for any costs incurred by Rancher in connection
      with Rancher’s Performance Assurances). For purposes of this
      Agreement, “Merit’s Proportionate Share” shall be a percentage determined
      with respect to any applicable period by dividing the MMCF of CO2
      purchased by Merit from Rancher pursuant to the Options during such period
      by the total MMCF of CO2 purchased by Rancher under the Retained Exxon
      Agreement during such period.  Rancher shall provide written
      notice to Merit of any such expenses and Merit shall pay Rancher any
      amounts owed thereunder within thirty (30) days of its receipt of such
      notice.

            


    

     

    
      	
               
      

            	
              (f)

            	
              Merit
      shall be entitled to Merit’s Proportionate Share of any GHGRR to which
      Rancher is entitled under the Retained Exxon Agreement with respect to
      volumes purchased pursuant to the Options.  Merit agrees to be
      responsible for Merit’s Proportionate Share of any performance assurances
      required to be provided by Rancher to Exxon under the Retained Exxon
      Agreement with respect to volumes purchased pursuant to the Options.  Merit’s Proportionate Share of
      performance assurances shall be provided at the same time and in the same
      manner as required to be provided by Rancher under the Contract, so long
      as Rancher provides Merit with written notice of such requirement in
      advance of the time such performance assurance is to be provided under the
      Contract so as to reasonably allow Merit to comply with its requirements
      hereunder.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (g)

            	
              During the period that Merit is purchasing volumes
      pursuant to the Options, Rancher shall take all actions reasonably
      required to comply with the terms and conditions of the Retained Exxon
      Agreement and to otherwise maintain the Retained Exxon Agreement as a
      valid, enforceable Agreement.  In the event Rancher is, or
      anticipates it will be, unable to perform its obligations under the
      Retained Exxon Agreement during such
      period, Rancher shall immediately provide Merit with notice
      thereof, and Merit shall have the right, in its sole discretion, to
      satisfy any such obligations in order to comply with or otherwise maintain
      the Retained Exxon Agreement.  In any such event, Rancher shall
      reimburse Merit for any third party expenses incurred by Merit (less an
      amount equal to Merit’s Proportionate Share of such
    expenses).

            


    

     

    
      	
               
      

            	
              (h)

            	
              In
      an Event of Default (as hereinafter
      defined) during the period that Merit
      is purchasing CO2 volumes pursuant to the Options, Rancher shall be
      obligated, in Merit’s sole discretion but subject to Exxon's rights and
      remedies and any other terms and conditions for Exxon’s benefit only in
      the Retained Exxon Agreement (including without limitation, Exxon’s right
      to terminate under Section 5.4(d) of the Retained Exxon Agreement), to
      assign the Retained Exxon Agreement to Merit.  Merit may
      exercise its election upon written notice to Rancher and Rancher shall
      deliver such assignment within five (5) days after receipt of Merit’s
      notice.   For purposes of this Agreement, an “Event of
      Default” will be deemed to occur if Rancher:  (a) makes an
      assignment for the benefit of creditors, or transfers or assigns to a
      creditor legal or equitable title, however effected, to any asset
      comprising all or a substantial portion of Rancher’s properties (other
      than cash) which is collateral or security for a debt or guarantee
      obligation owed to such creditor; (b) files a voluntary petition in
      bankruptcy; (c) is adjudged as bankrupt or insolvent, or has entered
      against it a final order of relief in any bankruptcy or insolvency
      proceeding; (d) files a petition or answer seeking for it any
      reorganization, arrangement, composition, readjustment, liquidation,
      dissolution or similar relief under any statute, law or regulation; (e)
      files an answer or other pleading admitting or failing to contest the
      material allegations of a petition filed against it in any proceeding of
      this nature; (f) seeks, consents to or acquiesces in the appointment of a
      trustee, receiver or liquidator of it or of all or any substantial part of
      its properties; (g) within 90 days after the commencement of any
      proceeding against it seeking reorganization, arrangement, composition,
      readjustment, liquidation, dissolution or similar relief under any
      statute, law or regulation, has not had such proceeding dismissed, or if
      within 90 days after the appointment without its consent or acquiescence
      of a trustee, receiver or liquidator of it or of all or any substantial
      part of its properties, the appointment is not vacated or stayed, or
      within 90 days after the expiration of any such stay, the appointment is
      not vacated.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (i)

            	
              Rancher
      shall not enter into any amendment to the Retained Exxon Agreement that adversely affects Merit’s rights under the
      Options without the prior written consent of Merit, which shall not be unreasonably withheld,
      conditioned or delayed. 

            


    

     

    
      	
               
      

            	
              (j)

            	
              To the extent volumes are delivered under the
      Options, this Agreement incorporates by reference the following provisions
      of the Contract substituting Rancher for “Seller” and Merit for
      “Buyer:”  Section 7.2, Royalty Reimbursement; Article 8, Taxes;
      Section 9.2, Passage of Title; Article 10, Measurement and Computation of
      Volumes; Section 11.2, Disclaimer of Certain Warranties; Section 11.3,
      Failure of Carbon Dioxide to Meet Quality Specifications; Section 11.4,
      Limitation of Liability and General Indemnities; Section 11.6, Force
      Majeure; Section 11.7, Assignment; and Section 11.18,
      Confidentiality.  To the
      extent any of the foregoing impose financial or other quantifiable
      obligations on Merit, such obligations shall only be imposed on Merit on a
      proportionate basis in accordance with Merit’s Proportionate
      Share.

            


    

     

    
      
        	 	3.	      
                Miscellaneous.

              
	 	 	 
	
                 
      

              	
                (a)

              	
                Merit
      may, in its sole discretion, file a memorandum of this Agreement in the
      county records acknowledging the existence of the Term Assignment and the
      Options.

              


      

    

     

    
      	
               
      

            	
              (b)

            	
              Each
      of the parties hereto hereby represents and warrants to the other party
      hereto that it has the capacity set forth on the signature pages hereof
      with full power and authority to bind the party on whose behalf it is
      executing this Agreement, and its authority is not inhibited by any
      private agreement or legal
proceeding.

            


    

     

    
      	
               
      

            	
              (c)

            	
              Assignor
      hereby represents and warrants to Assignee that: (a) all of the Assigned
      Interests are fully assignable, subject to
      obtaining Exxon’s consent; (b) it has not assigned, transferred,
      mortgaged, pledged or otherwise encumbered any of its right, title and
      interest in, to and under the Assigned Interests; (c) its right, title and
      interest therein is free and clear of all liens and
      encumbrances.  This Agreement is expressly conditioned on, and
      subject to those terms and conditions contained in, Exxon’s consent to
      Assignor’s assignment of the Assigned Interests, as required by the
      Contract, in substantially the form of the (i) Consent to Assignment, and
      (ii) Assumption and Ratification of Carbon Dioxide Sale and Purchase
      Agreement; Partial Interest Assignment attached hereto as Exhibit A (the
      ”Assumption”) or as otherwise provided in Article 11.7 of the
      Contract.  In the event Exxon does not consent within ninety
      (90) days of the Effective Date, this Agreement shall terminate with no
      further liability or obligation by either
party.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (d)

            	
              Assignor
      shall promptly execute and deliver such further instruments of assignment,
      transfer, conveyance, endorsement, direction or authorization and other
      documents as may be necessary to effectuate the purposes of this
      Agreement.

            


    

     

    
      	
               
      

            	
              (e)

            	
              This
      Agreement is governed by Colorado law, without regard to its conflicts of
      law provisions.  This Agreement may be executed in any number of
      counterparts, each of which may be executed by any one or more of the
      parties hereto, but all of which shall constitute one and the same
      instrument, and shall be binding and effective when all parties hereto
      have executed and delivered at least one
  counterpart.

            


    

     

    
      	
               
      

            	
              (f)

            	
              The
      terms and provisions of this Agreement shall be binding upon and inure to
      the benefit of the respective parties hereto, and their respective
      successors and assigns.

            


    

     

    
      	
               
      

            	
              (g)

            	
              In
      the event of any conflict between the Contract and this Agreement, the Contract shall
  control.

            


    

     

    
      	
               
      

            	
              (h)

            	
              This
      Agreement is the complete and final agreement between the parties hereto
      and supersedes all prior negotiations and agreements, whether written or
      oral.  This Agreement may only be amended by written agreement
      signed by both parties.

            


    

     

    


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    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first written above.

    
    

     

    
      
        
          
            	 	      
                    ASSIGNOR/RANCHER:

                    RANCHER
      ENERGY CORP.,

                    a
      Nevada corporation

                  
	 	 
	 	 
	 	 
	 	      
                    By:
      /s/John
      Works                            
      

                    Name:
      John
      Works                            
      

                    Title:
      President and
      CEO                    
      

                  


          

        

      

    

     

                                                                      

    


    


    


    


    
      	
              STATE
      OF COLORADO

            	
              §

            
	 
      	
              §

            
	
              COUNTY
      OF DENVER

            	
              §

            


    

    


               The
foregoing instrument was acknowledged before me by John Works, the President and
CEO of RANCHER ENERGY CORP., a Nevada corporation, on behalf of said corporation
this 17th day of
March, 2009.

    


    
      
        
          	 
      	
                  /s/Cheryl
      L. York

                
	 	      
                  Notary Public in and for the State of
      Colorado

                



      

    

    


    
      	
              (SEAL)

            	
              My
      Commission Expires: 09/24/2011

            


    

    


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    
      
        
          	
                  ASSIGNEE/MERIT:

                
	 
	
                  MERIT
      ENERGY COMPANY, LLC,

                
	
                  A
      DELAWARE LIMITED LIABILITY COMPANY

                
	 
      
	
                  BY:
      /S/ROBERT R.
      MATEJEK                                     
      

                
	
                  NAME:
      ROBERT R.
      MATEJEK                                  
      

                
	
                  TITLE:
      PRESIDENT                                                       
      

                


        

      

    

    


    


    


    


    
      	
              STATE
      OF TEXAS

            	
              §

            
	 
      	
              §

            
	
              COUNTY
      OF DALLAS

            	
              §

            


    

    


               The
foregoing instrument was acknowledged before me by Robert R. Matejek, the
President of MERIT ENERGY COMPANY, LLC, a Delaware limited liability company, on
behalf of said limited liability company this 16th day of
March, 2009.

    


    
      
        
          
            
              
                	 	
                        /s/Stephanie Lott

                      
	 	 
      
	 	
                        Notary Public in and for the State of
      Texas

                      
	 	 
	(SEAL)	My
      commission expires:
10/07/2012