**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D. C. 20549**





**FORM
      10-Q**





**x****QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
      THE
      SECURITIES EXCHANGE ACT OF 1934**





For
      the
      quarterly period ended June 30, 2008





OR





**o****TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934**




For
      the
      transition period from _____________ to ___________________.




Commission
      file number: 000-51425




**Rancher
      Energy Corp.**





(Exact
      name of registrant as specified in its charter)





Nevada
            98-0422451(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)





999
      -
      18 th Street,
      Suite 3400


Denver,
      CO 80202


(Address
      of principal executive offices)





(303)
      629-1125


(Registrant’s
      telephone number, including area code)




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for 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 o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.




Large accelerated filer
             ̈
            Accelerated filer
             ̈Non-accelerated filer
             ̈(Do not check if a smaller reporting company)
            Small reporting company
            x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).




Yes
o  No
x




As
      of
      July 30, 2008, 115,367,878 shares of Rancher Energy Corp. common stock, $.00001
      par value, were outstanding.










**Rancher
      Energy Corp.**




**Table
      of Contents**




**PART
                I - FINANCIAL INFORMATION**Item
                1.
            Financial
                StatementsUnaudited
                Consolidated Balance Sheets as of June 30, 2008 and March 31,
                2008
            
            03Unaudited
                Consolidated Statements of Operations for the Three Months ended
                June 30,
                2008 and 2007
            
            05Unaudited
                Consolidated Statement of Changes in Stockholders’ Equity as of June 30,
                2008
            
            06Unaudited
                Consolidated Statements of Cash Flows for the Three Months ended
                June 30,
                2008 and 2007
            
            07Notes
                to Unaudited Consolidated Financial Statements
            
            08Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            
            20Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            
            26Item
                4.
            Controls
                and Procedures
            
            27**PART
                II - OTHER INFORMATION**Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            28Item
                6.
            Exhibits
            
            29SIGNATURES
            
            
            32





2




**PART
      I. FINANCIAL INFORMATION.**





**Item
      1. Financial Statements**





Rancher
      Energy Corp.


Consolidated
      Balance Sheets


(Unaudited)





**ASSETS**





June 30, 2008
            
            March 31, 2008Current
                assets:Cash
                and cash equivalents
            
            $
            5,199,914
            
            $
            6,842,365Accounts
                receivable and prepaid expenses
            
            
            1,101,987
            
            
            1,170,641Total
                current assets
            
            
            6,301,901
            
            
            8,013,006Oil
                and gas properties at cost (successful efforts method):Unproved
            
            
            54,051,180
            
            
            54,058,073Proved
            
            
            20,876,225
            
            
            20,734,143Less:
                Accumulated depletion, depreciation and amortization
            
            
            (1,757,403
            )
            
            (1,531,619
            )Net
                oil and gas properties
            
            
            73,170,002
            
            
            73,260,597Other
                assets:Furniture
                and equipment net of accumulated depreciation of $251,401 and $204,420,
                respectively
            
            
            937,914
            
            
            997,196Other
                assets
            
            
            1,151,276
            
            
            1,300,382Total
                other assets
            
            
            2,089,190
            
            
            2,297,578Total
                assets
            
            $
            81,561,093
            
            $
            83,571,181





The
      accompanying notes are an integral part of these financial
      statements.





3





Rancher
      Energy Corp.


Consolidated
      Balance Sheets





(Unaudited)




**LIABILITIES
      AND STOCKHOLDERS’ EQUITY**





June 30, 2008
            
            March 31, 2008Current
                liabilities:Accounts
                payable and accrued liabilities
            
            $
            1,037,165
            
            $
            2,114,204Accrued
                oil and gas property costs
            
            
            250,000
            
            
            250,000Asset
                retirement obligation
            
            
            366,319
            
            
            337,685Note
                payable, net of unamortized discount of $1,452,742 and $2,527,550,
                respectively
            
            
            10,787,258
            
            
            9,712,450Derivative
                liability
            
            
            1,939,318
            
            
            590,480Total
                current liabilities
            
            
            14,380,060
            
            
            13,004,819Long-term
                liabilities:Derivative
                liability
            
            
            520,802
            
            
            246.553Asset
                retirement obligation
            
            
            944,612
            
            
            922,166Total
                long-term liabilities
            
            
            1,465,414
            
            
            1,168,719Commitments
                and contingenciesStockholders’
                equity:Common
                stock, $0.00001 par value, 275,000,000 shares authorized at June
                30 and
                March 31, 2008; 115,367,855 and 114,878,341 shares issued
                and outstanding at June 30 and March 31, 2008,
                respectively
            
            
            1,154
            
            
            1,150Additional
                paid-in capital
            
            
            92,008,169
            
            
            91,790,181Accumulated
                deficit
            
            
            (26,293,704
            )
            
            (22,393,688
            )Total
                stockholders’ equity
            
            
            65,715,619
            
            
            69,397,643Total
                liabilities and stockholders’ equity
            
            $
            81,561,093
            
            $
            83,571,181





The
      accompanying notes are an integral part of these financial
      statements.





4





Rancher
      Energy Corp.


Consolidated
      Statements of Operations


(Unaudited)





Three Months Ended June 30,2008
            
            2007Revenues:Oil
                and gas sales
            
            $
            1,898,967
            
            $
            1,330,479Losses
                on derivative activities
            
            
            (1,895,293
            )
            
            -Total
                revenues
            
            
            3,674
            
            
            1,330,479Operating
                expenses:Production
                taxes
            
            
            230,283
            
            
            161,469Lease
                operating expenses
            
            
            623,421
            
            
            588,233Depreciation,
                depletion, and amortization
            
            
            275,841
            
            
            331,532Accretion
                expense
            
            
            46,276
            
            
            45,990Exploration
                expense
            
            
            9,604
            
            
            41,158General
                and administrative
            
            
            1,048,376
            
            
            2,539,992Total
                operating expenses
            
            
            2,233,801
            
            
            3,708,374Loss
                from operations
            
            
            (2,230,127
            )
            
            (2,377,895
            )Other
                income (expense):Liquidated
                damages pursuant to registration rights arrangement
            
            
            -
            
            
            (1,377,110
            )Amortization
                of deferred financing costs and discount on note payable
            
            
            (1,309,175
            )
            
            -Interest
                expense
            
            
            (371,295
            )
            
            (71,239
            )Interest
                and other income
            
            
            10,581
            
            
            48,323Total
                other expense
            
            
            (1,669,889
            )
            
            (1,400,026
            )Net
                loss
            
            $
            (3,900,016
            )
            $
            (3,777,921
            )Basic
                and diluted net loss per share
            
            $
            (0.03
            )
            $
            (0.04
            )Basic
                and diluted weighted average shares outstanding
            
            
            114,966,138
            
            
            103,734,995




The
      accompanying notes are an integral part of these financial
      statements.




5




Rancher
      Energy Corp.


Consolidated
      Statement of Changes in Stockholders’ Equity


(Unaudited)





Shares
            
            Amount
            
            Additional Paid-
              In Capital
            
            Accumulated
              Deficit
            
            Total
              Stockholders’
              EquityBalance,
                March 31, 2008
            
            
            114,878,341
            
            $
            1,150
            
            $
            91,790,181
            
            $
            (22,393,688
            )
            $
            69,397,643Stock
                issued upon exercise of stock options
            
            
            250,000
            
            
            2
            
            
            -
            
            
            -
            
            
            2Common
                stock exchanged for services –non-employee directors
            
            
            239,514
            
            
            2
            
            
            100,098
            
            
            -
            
            
            100,100Stock-based
                compensation
            
            
            -
            
            
            -
            
            
            117,890
            
            
            -
            
            
            117,890Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (3,900,016
            )
            
            (3,900,016
            )Balance,
                June 30, 2008
            
            
            115,367,855
            
            $
            1,154
            
            $
            92,008,169
            
            $
            (26,293,704
            )
            $
            65,715,619




The
      accompanying notes are an integral part of these financial
      statements.




6





Rancher
      Energy Corp.


Consolidated
      Statements of Cash Flows


(Unaudited)





Three Months Ended June 30,2008
            
            2007Cash
                flows from operating activities:Net
                loss
            
            $
            (3,900,016
            )
            $
            (3,777,921
            )Adjustments
                to reconcile net loss to cash used for operating
                activities:Depreciation,
                depletion, and amortization
            
            
            275,841
            
            
            331,532Accretion
                expense
            
            
            46,276
            
            
            45,990Asset
                retirement obligation
            
            
            -
            
            
            (46,665
            )Liquidated
                damages pursuant to registration rights arrangement
            
            
            -
            
            
            1,377,110Imputed
                interest expense
            
            
            -
            
            
            70,552Amortization
                of deferred financing costs and discount on note payable
            
            
            1,309,176
            
            
            -Unrealized
                losses on derivative activities
            
            
            1,544,814
            
            
            -Stock-based
                compensation expense
            
            
            117,890
            
            
            343,133Services
                exchanged for common stock – directors
            
            
            100,100
            
            
            203,500Services
                exchanged for common stock – non-employee
            
            
            -
            
            
            112,500Loss
                on asset sale
            
            
            8,525
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (95,771
            )
            
            (66,168
            )Prepaid
                expenses
            
            
            164,425
            
            
            -Other
                assets
            
            
            -
            
            
            (6,420
            )Accounts
                payable and accrued liabilities
            
            
            (752,818
            )
            
            (465,114
            )Net
                cash used for operating activities
            
            
            (1,181,558
            )
            
            (1,877,971
            )Cash
                flows from investing activities:Capital
                expenditures for oil and gas properties
            
            
            (189,579
            )
            
            (95,873
            )Proceeds
                from conveyance of unproved oil and gas properties
            
            
            -
            
            
            525,000Increase
                in other assets
            
            
            (158,063
            )
            
            (476,687
            )Net
                cash used for investing activities
            
            
            (347,642
            )
            
            (47,560
            )Cash
                flows from financing activities:Payment
                of deferred financing costs
            
            
            (113,253
            )
            
            (57,215
            )Proceeds
                from issuance of common stock upon exercise of stock
                options
            
            
            2
            
            
            10Payment
                of offering costs
            
            
            -
            
            
            (41,356
            )Net
                cash used for financing activities
            
            
            (113,251
            )
            
            (98,561
            )Decrease
                in cash and cash equivalents
            
            
            (1,642,451
            )
            
            (2,024,092
            )Cash
                and cash equivalents, beginning of period
            
            
            6,842,365
            
            
            5,129,883Cash
                and cash equivalents, end of period
            
            $
            5,199,914
            
            $
            3,105,791Non-cash
                investing and financing activities:Cash
                paid for interest
            
            $
            371,280
            
            $
            -Payables
                settled for oil and gas properties
            
            $
            30,372
            
            $
            -Asset
                retirement asset and obligation
            
            $
            4,804
            
            $
            18,473




7





Rancher
      Energy Corp.


Notes
      to
      Consolidated Financial Statements


(Unaudited)





**Note
      1 – Organization and Summary of Significant Accounting
      Policies**




Organization




Rancher
      Energy Corp. (“Rancher Energy” or the “Company”) was incorporated in Nevada on
      February 4, 2004. The Company acquires, explores for, develops and produces
      oil
      and natural gas, concentrating on applying secondary and tertiary recovery
      technology to older, historically productive fields in North America.




Basis
      of Presentation




The
      accompanying unaudited consolidated financial statements include the accounts
      of
      the Company’s wholly owned subsidiary, Rancher Energy Wyoming, LLC, a Wyoming
      limited liability company that was formed on April 24, 2007. In management’s
      opinion, the Company has made all adjustments, consisting of only normal
      recurring adjustments, necessary for a fair presentation of financial position,
      results of operations, and cash flows. The consolidated financial statements
      should be read in conjunction with financial statements included in the
      Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2008.
      The accompanying consolidated financial statements have been prepared in
      accordance with accounting principles generally accepted in the United States
      for interim financial information. They do not include all information and
      notes
      required by generally accepted accounting principles for complete financial
      statements. However, except as disclosed herein, there has been no material
      change in the information disclosed in the notes to financial statements
      included in the Company’s Annual Report on Form 10-K for the fiscal year ended
      March 31, 2008. Operating results for the periods presented are not necessarily
      indicative of the results that may be expected for the full year.




The
      accompanying financial statements have been prepared on the basis of accounting
      principles applicable to a going concern, which contemplates the realization
      of
      assets and extinguishment of liabilities in the normal course of business.
      As
      shown in the accompanying financial statements, we have incurred a cumulative
      net loss of $26.3 million for the period from inception (February 4, 2004)
      to
      June 30, 2008, and we have a working capital deficit of approximately $8.1
      million as of June 30, 2008. We require significant additional funding to repay
      the short term debt in the amount of $12.2 million, scheduled to mature on
      October 31, 2008, and for our planned oil and gas development operations. Our
      ability to continue the Company as a going concern is dependent upon our ability
      to obtain additional funding in order to finance our planned
      operations.




Use
      of
      Estimates in the Preparation of Financial Statements




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts of oil and gas reserves, assets
      and liabilities, disclosure of contingent assets and liabilities at the date
      of
      the financial statements, and the reported amounts of revenues and expenses
      during the reporting periods. Actual results could differ from those estimates.




The
      Company’s financial statements are based on a number of significant estimates,
      including oil and gas reserve quantities which are the basis for the calculation
      of depreciation, depletion and impairment of oil and gas properties, and timing
      and costs associated with its retirement obligations, estimates of the fair
      value of derivative instruments and impairments to unproved
      property.




8




Oil
      and Gas Producing Activities




The
      Company uses the successful efforts method of accounting for its oil and gas
      properties. Under this method of accounting, all property acquisition costs
      and
      costs of exploratory and development wells are capitalized when incurred,
      pending determination of whether the well has found proved reserves. If an
      exploratory well does not find proved reserves, the costs of drilling the well
      are charged to expense. Exploratory dry hole costs are included in cash flows
      from investing activities as part of capital expenditures within the
      consolidated statements of cash flows. The costs of development wells are
      capitalized whether or not proved reserves are found. Costs of unproved leases,
      which may become productive, are reclassified to proved properties when proved
      reserves are discovered on the property. Unproved oil and gas interests are
      carried at the lower of cost or estimated fair value and are not subject to
      amortization.




Geological
      and geophysical costs and the costs of carrying and retaining unproved
      properties are expensed as incurred. DD&A of capitalized costs related to
      proved oil and gas properties is calculated on a property-by-property basis
      using the units-of-production method based upon proved reserves. The computation
      of DD&A takes into consideration restoration, dismantlement, and abandonment
      costs and the anticipated proceeds from salvaging equipment.




The
      Company complies with Statement of Financial Accounting Standards Staff Position
      No. FAS 19-1, “ Accounting
      for Suspended Well Costs ”,
      (FSP
      FAS 19-1). The Company currently does not have any existing capitalized
      exploratory well costs, and has therefore determined that no suspended well
      costs should be impaired.




The
      Company reviews its long-lived assets for impairments when events or changes
      in
      circumstances indicate that impairment may have occurred. The impairment test
      for proved properties compares the expected undiscounted future net cash flows
      on a property-by-property basis with the related net capitalized costs,
      including costs associated with asset retirement obligations, at the end of
      each
      reporting period. Expected future cash flows are calculated on all proved
      reserves using a discount rate and price forecasts selected by the Company’s
      management. The discount rate is a rate that management believes is
      representative of current market conditions. The price forecast is based on
      NYMEX strip pricing, adjusted for basis and quality differentials, for the
      first
      three to five years and is held constant thereafter. Operating costs are also
      adjusted as deemed appropriate for these estimates. When the net capitalized
      costs exceed the undiscounted future net revenues of a field, the cost of the
      field is reduced to fair value, which is determined using discounted future
      net
      revenues. An impairment allowance is provided on unproved property when the
      Company determines the property will not be developed or the carrying value
      is
      not realizable.




Capitalized
      Interest




The
      Company’s policy is to capitalize interest costs to oil and gas properties on
      expenditures made in connection with exploration, development and construction
      projects that are not subject to current DD&A and that require greater than
      six months to be readied for their intended use (“qualifying projects”).
      Interest is capitalized only for the period that such activities are in
      progress. To date the Company has had no such qualifying projects during periods
      when interest expense has been incurred. Accordingly the Company has recorded
      no
      capitalized interest.




Commodity
      Derivatives




The
      Company accounts for derivative instruments or hedging activities under the
      provisions of Statement of Financial Accounting Standards (“SFAS”) No. 133,
“Accounting for Derivative Instruments and Hedging Activities.”
SFAS No. 133 requires the Company to record derivative instruments at
      their fair value. The Company’s risk management strategy is to enter into
      commodity derivatives that set “price floors” and “price ceilings” for its crude
      oil production. The objective is to reduce the Company’s exposure to commodity
      price risk associated with expected crude oil production.




The
      Company has elected not to designate the commodity derivatives to which they
      are
      a party as cash flow hedges, and accordingly, such contracts are recorded at
      fair value on its balance sheets and changes in such fair value are recognized
      in current earnings as income or expense as they occur.




9




The
      Company does not hold or issue commodity derivatives for speculative or trading
      purposes. The Company is exposed to credit losses in the event of nonperformance
      by the counterparty to its commodity derivatives. It is anticipated, however,
      that its counterparty will be able to fully satisfy its obligations under the
      commodity derivatives contracts. The Company does not obtain collateral or
      other
      security to support its commodity derivatives contracts subject to credit risk
      but does monitor the credit standing of the counterparty. Under the terms of
      the
      Term Credit Agreement issued in October 2007 the Company was required to hedge
      a
      portion of its expected future production, and it entered into a costless collar
      agreement for a portion of its anticipated future crude oil production. The
      costless collar contains a fixed floor price (put) and ceiling price
      (call). If the index price exceeds the call strike price or falls below the
      put
      strike price, the Company receives the fixed price and pays the market price.
      If
      the market price is between the call and the put strike price, no payments
      are
      due from either party. The
      price
      the Company receives for production in its three fields is indexed to Wyoming
      Sweet crude oil posted price. The
      Company has not hedged the basis differential between the NYMEX price and the
      Wyoming Sweet price.




Derivative
      losses are included in cash flows from operating activities in the accompanying
      Consolidated Statements of Cash Flows. T he
      table
      below summarizes the realized and unrealized losses related to our derivative
      instruments for the three months ended June 30, 2008.




Realized
                losses on derivative instruments
            
            $
            350,479Unrealized
                losses on derivative instruments
            
            
            1,544,814Total
                realized and unrealized losses recorded
            
            $
            1,895,293




The
      Company had no derivative transactions during the same period in
      2007.




The
      Company established the fair value of its derivative instruments using estimates
      of fair value reported by the counterparty and subsequently evaluated internally
      using an established index price and other sources.. The actual contribution
      to
      future results of operations will be based on the market prices at the time
      of
      settlement and may be more or less than the value estimates used at
      June 30, 2008. The
      table
      below summarizes the terms of the Company’s costless collar:




Contract
              Feature
            
            Contract Term
            
            Total
              Volume
              Hedged
              (Bbls)
            
            Remaining
              Volume
              Hedged
              (Bbls)
            
            Index
            
            Fixed Price
              ($/Bbl)
            
            Position at
              June 30, 2008
              Due To
              (From)
              CompanyPut
            
            
            Nov 07—Oct 08
            
            
            113,220
            
            
            74,193
            
            
            WTI NYMEX
            
            $
            65.00
            
            
            -Call
            
            
            Nov 07—Oct 08
            
            
            67,935
            
            
            44,518
            
            
            WTI NYMEX
            
            $
            83.50
            
            $
            (2,460,120
            )




Other
      Significant Accounting Policies




Other
      accounting policies followed by the Company are set forth in Note 1 to the
      Consolidated Financial Statements included in its Annual Report on Form 10-K
      for
      the year ended March 31, 2008, and are supplemented in the Notes to Consolidated
      Financial Statements in this Quarterly Report on Form 10-Q for the three months
      ended June 30, 2008. These unaudited consolidated financial statements and
      notes
      should be read in conjunction with the consolidated financial statements and
      notes included in the Annual Report on Form 10-K for the year ended March 31,
      2008.





10




Net
      Loss Per Share




Basic
      net
      (loss) per common share of stock is calculated by dividing net loss available
      to
      common stockholders by the weighted-average of common shares outstanding during
      each period.




Diluted
      net income per common share is calculated by dividing adjusted net loss by
      the
      weighted-average of common shares outstanding, including the effect of other
      dilutive securities. The Company’s potentially dilutive securities consist of
      in-the-money outstanding options and warrants to purchase the Company’s common
      stock. Diluted net loss per common share does not give effect to dilutive
      securities as their effect would be anti-dilutive.




The
      treasury stock method is used to measure the dilutive impact of stock options
      and warrants. The following table details the weighted-average dilutive and
      anti-dilutive securities related to stock options and warrants for the periods
      presented:


Three
                  Months  Ended June 30,2008
              
              2007Dilutive
              
              
              -
              
              
              -Anti-dilutive
              
              
              77,401,402
              
              
              81,583,550




Reclassification




Certain
      amounts in the 2007 financial statements have been reclassified to conform
      to
      the 2008 financial statement presentation. Such reclassification had no effect
      on net loss.




Recent
      Accounting Pronouncements




In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value
      as used in numerous accounting pronouncements, establishes a framework for
      measuring fair value in generally accepted accounting principles and expands
      disclosure related to the use of fair value measures in financial statements.
      In
      February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-1,
“Application of FASB Statement No. 157 to FASB Statement No. 13 and
      Other Accounting Pronouncements That Address Fair Value Measurements for
      Purposes of Lease Classification or Measurement under Statement 13,” which
      removes certain leasing transactions from the scope of SFAS No. 157, and
      FSP FAS 157-2, “Effective Date of FASB Statement No. 157,” which defers the
      effective date of SFAS No. 157 for one year for certain nonfinancial assets
      and nonfinancial liabilities, except those that are recognized or disclosed
      at
      fair value in the financial statements on a recurring basis. On
      April 1, 2008, the Company adopted, without material impact on its
      financial statements, the provisions of SFAS No. 157 related to financial
      assets and liabilities and to nonfinancial assets and liabilities measured
      at
      fair value on a recurring basis. Beginning April 1, 2009, the Company will
      adopt the provisions for nonfinancial assets and nonfinancial liabilities that
      are not required or permitted to be measured at fair value on a recurring basis,
      which will include, among others, those nonfinancial long-lived assets measured
      at fair value for impairment assessment and asset retirement obligations
      initially measured at fair value. The Company does not expect the provisions
      of
      SFAS No. 157 related to these items to have a material impact on its
      consolidated financial statements (see Note 4).




On
      February 15, 2007, the FASB issued SFAS No. 159, “The Fair Value
      Option for Financial Assets and Financial Liabilities.” This statement
      establishes presentation and disclosure requirements designed to facilitate
      comparisons between companies that choose different measurement attributes
      for
      similar types of assets and liabilities. SFAS No. 159 was effective for the
      Company’s financial statements April 1, 2008 and the adoption had no
      material effect on its financial position or results of operations.




In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
      Combinations” (“SFAS No. 141R”), which replaces FASB Statement No. 141.
      SFAS No. 141R establishes principles and requirements for how an acquirer
      recognizes and measures in its financial statements the identifiable assets
      acquired, the liabilities assumed, any non controlling interest in the acquiree
      and the goodwill acquired, and establishes that acquisition costs will be
      generally expensed as incurred. This statement also establishes disclosure
      requirements which will enable users to evaluate the nature and financial
      effects of the business combination. SFAS No. 141R is effective as of the
      beginning of an entity’s fiscal year that begins after December 15, 2008,
      which will be the Company’s year beginning April 1, 2009. The Company is
      currently evaluating the potential impact, if any, of the adoption of SFAS
      No. 141R on its future financial reporting.




11




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
      in Consolidated Financial Statements—amendments of ARB No. 51.” SFAS
      No. 160 states that accounting and reporting for minority interests will be
      recharacterized as noncontrolling interests and classified as a component of
      equity. SFAS No. 160 also establishes reporting requirements that provide
      sufficient disclosures that clearly identify and distinguish between the
      interests of the parent and the interests of the noncontrolling owners. This
      statement is effective as of the beginning of an entity’s first fiscal year
      beginning after December 15, 2008, which corresponds to the Company’s year
      beginning January 1, 2009. The Company is currently evaluating the
      potential impact, if any, of the adoption of SFAS No. 160 on its future
      financial reporting.




In
      April 2007, the FASB issued FSP FIN 39-1, “Amendment of FASB Interpretation
      No. 39” (FSP FIN 39-1). FSP FIN 39-1 defines “right of setoff” and
      specifies what conditions must be met for a derivative contract to qualify
      for
      this right of setoff. It also addresses the applicability of a right of setoff
      to derivative instruments and clarifies the circumstances in which it is
      appropriate to offset amounts recognized for those instruments in the statement
      of financial position. In addition, this FSP permits offsetting of fair value
      amounts recognized for multiple derivative instruments executed with the same
      counterparty under a master netting arrangement and fair value amounts
      recognized for the right to reclaim cash collateral (a receivable) or the
      obligation to return cash collateral (a payable) arising from the same master
      netting arrangement as the derivative instruments. The Company adopted this
      interpretation on April 1, 2008 and the adoption of FSP FIN 39-1 had no material
      effect on its financial position or results of operations.




On
      March 19, 2008, the FASB issued SFAS No. 161, “Disclosures about
      Derivative Instruments and Hedging Activities” which amends SFAS No. 133 by
      requiring expanded disclosures about an entity’s derivative instruments and
      hedging activities, but does not change SFAS No. 133’s scope or accounting.
      This statement is effective for financial statements issued for fiscal years
      and
      interim periods beginning after November 15, 2008, with early adoption
      permitted. The Company is currently evaluating the potential impact, if any,
      of
      the adoption of SFAS No. 161 on its future financial
      reporting.




In
      March 2008, the FASB, affirmed the consensus of FSP APB 14-a, “Accounting
      for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion
      (Including Partial Cash Settlement)”, which applies to all convertible debt
      instruments that have a ''net settlement feature’’; which means that such
      convertible debt instruments, by their terms, may be settled either wholly
      or
      partially in cash upon conversion. FSP APB 14-a requires issuers of convertible
      debt instruments that may be settled wholly or partially in cash upon conversion
      to separately account for the liability and equity components in a manner
      reflective of the issuer’s nonconvertible debt borrowing rate. Previous guidance
      provided for accounting for this type of convertible debt instrument entirely
      as
      debt. FSP APB 14-a is effective for financial statements issued for fiscal
      years
      beginning after December 15, 2008 and interim periods within those fiscal
      years. The Company is currently evaluating the impact adoption of FSP APB 14-a
      may have on its consolidated financial statements.





12




**Note
      2—Oil and Gas Properties**




Acquisitions




In
      December 2006 and January 2007, the Company purchased oil and gas properties
      in
      Wyoming’s Powder River Basin area, consisting of the Cole Creek South Field, the
      South Glenrock B Field and the Big Muddy Field. The total purchase price for
      the
      three fields was $71.8 million plus acquisition and closing costs of $1.6
      million. The
      Company’s business plan includes the injection of CO 2 into its
      three oil fields and the Company has entered into two separate CO 2 agreements
      as more fully described in the Company’s Annual Report on Form 10-K for the
      fiscal year ended March 31, 2008.




The
      Company’s oil and gas properties are summarized in the following
      table:


**June 30,**
              
              **March
                  31,****2008**
              
              **2008**Proved
                  properties
              
              $
              20,876,225
              
              $
              20,734,143Unimproved
                  properties excluded from DD&A
              
              
              53,677,400
              
              
              53,655,471Equipment
                  and other
              
              
              373,780
              
              
              402,602Subtotal
                  Unevaluated Properties
              
              
              54,051,180
              
              
              54,058,073Total
                  oil and gas properties
              
              
              74,927,405
              
              
              74,792,216Less
                  accumulated depletion, depreciation, amortization and impairment
              
              
              (1,757,403
              )
              
              (1,531,619
              )$
              73,170,002
              
              $
              73,260,597




Impairment
      of Unproved Properties




The
      Company has recorded no impairment of unproved properties in the three months
      ended June 30, 2008 or 2007.




Financing
      Letter of Intent




In
      April
      2008 the Company executed a non-binding letter of intent with an experienced
      industry operator (the “Industry Operator”) under which the Industry Operator
      will spend up to $83.5 million to earn up to a 55% working interest in the
      Company’s three fields in the Powder River Basin - the Big Muddy, Cole Creek
      South, and South Glenrock B. The earn-in period is expected to be three years,
      or less depending on the requirements of the development plan. Upon the closing,
      the Industry Operator will provide $12,240,000 of the funds to retire the Short
      Term Note Payable (Note 5) and the remainder of the funds will be utilized
      primarily for the development of the Company’s CO 2 enhanced
      oil recovery (EOR) project in its three fields. On July 25, 2008, the Company
      entered into an amendment to the letter of intent originally executed with
      industry partners on April 21, 2008, that waived the provisions restricting
      us
      from entering into negotiations with other parties for the disposition or
      financing of all or a part of the properties covered by the letter of intent.
      Negotiations are ongoing with the Industry Operator.




**Note
      3 – Asset Retirement Obligations**




The
      Company recognizes an estimated liability for future costs associated with
      the
      abandonment of its oil and gas properties. A liability for the fair value of
      an
      asset retirement obligation and a corresponding increase to the carrying value
      of the related long-lived asset are recorded at the time a well is completed
      or
      acquired. The increase in carrying value is included in proved oil and gas
      properties in the balance sheets. The Company depletes the amount added to
      proved oil and gas property costs and recognizes accretion expense in connection
      with the discounted liability over the remaining estimated economic lives of
      the
      respective oil and gas properties. Cash paid to settle asset retirement
      obligations is included in the operating section of the Company’s statements of
      cash flows.




13




The
      Company’s estimated asset retirement obligation liability is based on historical
      experience in abandoning wells, estimated economic lives, estimates as to the
      cost to abandon the wells in the future, and federal and state regulatory
      requirements. The liability is discounted using a credit-adjusted risk-free
      rate
      estimated at the time the liability is incurred or revised, as appropriate.
      The
      credit-adjusted risk-free rate used to discount the Company’s abandonment
      liabilities was 13.1%. Revisions to the liability result from changes in
      estimated abandonment costs, and changes in well economic lives, or if federal
      or state regulators enact new requirements regarding the abandonment of
      wells.




A
      reconciliation of the Company’s asset retirement obligation liability during the
      three months ended June
      30 is as
      follows:




2008
            
            2007Balance,
                April 1
            
            $
            1,259,851
            
            $
            1,221,567Liabilities
                incurred
            
            
            7,916
            
            
            18,473Liabilities
                settled
            
            
            -
            
            
            (46,665
            )Changes
                in estimates
            
            
            (3,112
            )
            
            -Accretion
                expense
            
            
            46,276
            
            
            45,990Balance,
                June 30
            
            $
            1,310,931
            
            $
            1,239,365Current
            
            $
            366,319
            
            $
            175,187Long-term
            
            
            944,612
            
            
            1,064,178$
            1,310,931
            
            $
            1,239,365





**NOTE
      4 — Fair Value Measurements**




On
      April
      1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements,” which
      defines fair value, establishes a framework for using fair value to measure
      assets and liabilities, and expands disclosures about fair value measurements.
      The Statement establishes a hierarchy for inputs used in measuring fair value
      that maximizes the use of observable inputs and minimizes the use of
      unobservable inputs by requiring that the most observable inputs be used when
      available. Observable inputs are inputs that market participants would use
      in
      pricing the asset or liability developed based on market data obtained from
      sources independent of the Company. Unobservable inputs are inputs that reflect
      the Company’s assumptions of what market participants would use in pricing the
      asset or liability developed based on the best information available in the
      circumstances. The hierarchy is broken down into three levels based on the
      reliability of the inputs as follows:




·
            Level
                1: Quoted prices are available in active markets for identical assets
                or
                liabilities;


·
            Level
                2: Quoted prices in active markets for similar assets and liabilities
                that
                are observable for the asset or liability;
                or


·
            Level
                3: Unobservable pricing inputs that are generally less observable
                from
                objective sources, such as discounted cash flow models or
                valuations.




SFAS
      No. 157 requires financial assets and liabilities to be classified based on
      the lowest level of input that is significant to the fair value measurement.
      The
      Company’s assessment of the significance of a particular input to the fair value
      measurement requires judgment, and may affect the valuation of the fair value
      of
      assets and liabilities and their placement within the fair value hierarchy
      levels. The following table presents the Company’s financial assets and
      liabilities that were accounted for at fair value on a recurring basis as of
      June 30, 2008 by level within the fair value hierarchy:




14




Fair Value Measurements UsingLevel 1
                
                Level
                    2
                
                Level
                    3Assets
                
                $
                —
                
                $
                —
                
                $
                —Liabilities:Derivative
                    instrument
                
                $
                —
                
                $
                —
                
                $
                2,460,120




The
      Company’s sole derivative financial instrument is a participating cap costless
      collar agreement. The fair value of the costless collar agreement is determined
      based on both observable and unobservable pricing inputs and therefore, the
      data
      sources utilized in these valuation models are considered level 3 inputs in
      the
      fair value hierarchy.




The
      following table sets forth a reconciliation of changes in the fair value of
      financial liabilities classified as Level 3 in the fair value
      hierarchy:


Derivatives
              
              TotalBalance
                  as of April 1, 2008
              
              $
              (837,033
              )
              $
              (837,033
              )Total
                  losses (realized or unrealized):Included
                  in earnings
              
              
              (1,895,293
              )
              
              (1,895,293
              )Included
                  in other comprehensive income
              
              
              —
              
              
              —Purchases,
                  issuances and settlements
              
              
              272,206
              
              
              272,206
                  50,479Transfers
                  in and out of Level 3
              
              
              —
              
              
              —Balance
                  as of June 30, 2008
              
              $
              (2,460,120
              )
              $
              (2,460,120
              )Change
                  in unrealized losses included in earnings relating to derivatives
                  still
                  held as of June 30, 2008
              
              $
              (2,460,120
              )
              $
              (2,460,120
              )





15




**Note
      5 – Short-term Note Payable**





On
      October 16, 2007, the Company borrowed $12,240,000 pursuant to a Term Credit
      Agreement with a financial institution (the Lender), resulting in net proceeds
      of $11,622,800 after the deduction of the Lender’s fees, expenses, and three
      months of interest to be held in escrow. In addition, the Company incurred
      approximately $390,000 in investment banking, legal, and other fees and expenses
      in connection with the transaction. The Company capitalized costs associated
      with the issuance of the Note Payable as deferred financing costs. Amortization
      of the deferred financing costs in the amount of $234,367 is included in
      amortization of deferred financing costs for the three months ended June 30,
      2008.




All
      amounts outstanding under the Credit Agreement are due and payable on October
      31, 2008 (Maturity Date) and bear interest at a rate equal to the greater of
      (a)
      12% per annum and (b) the one-month LIBOR rate plus 6% per annum. The Company
      is
      required to make monthly interest payments on the amounts outstanding under
      the
      Credit Agreement, but is not required to make any principal payments until
      the
      Maturity Date. The Company may prepay the amounts outstanding under the Credit
      Agreement at any time without penalty.




The
      Company’s obligations under the Credit Agreement are collateralized by a first
      priority security interest in its properties and assets, including all rights
      under oil and gas leases in its three producing oil fields in the Powder River
      Basin of Wyoming and all of its equipment on those properties. The Company
      also
      granted the Lender a 2% Overriding Royalty Interest (ORRI), proportionally
      reduced when the Company’s working interest is less than 100%, in all crude oil
      and natural gas produced from its three Powder River Basin fields. The Company
      estimates that the fair value of the ORRI granted to the Lender is approximately
      $4,500,000 and has recorded this amount as a discount to the Note Payable and
      as
      a decrease of oil and gas properties. Amortization of the discount based upon
      the effective interest method in the amount of $1,074,808 is included in
      amortization of deferred financing costs for the three months ended June 30,
      2008. As long as any of its obligations remain outstanding under the Credit
      Agreement, the Company will be required to grant the same ORRI to the Lender
      on
      any new working interests acquired after closing. Prior to the Maturity Date,
      the Company may re-acquire 50% of the ORRI granted to the Lender at a repurchase
      price calculated to ensure that total payments by the Company to the Lender
      of
      principal, interest, ORRI revenues, and ORRI repurchase price will equal 120%
      of
      the loan amount.




The
      Credit Agreement contains several events of default, including if, at any time
      after closing, the Company’s most recent reserve report indicates that its
      projected net revenue attributable to proved reserves is insufficient to fully
      amortize the amounts outstanding under the Credit Agreement within a 48-month
      period and it is unable to demonstrate to the Lender’s reasonable satisfaction
      that it would be able to satisfy such outstanding amounts through a sale of
      its
      assets or an sale of equity. Upon the occurrence of an event of default under
      the Credit Agreement, the Lender may accelerate the Company’s obligations under
      the Credit Agreement. Upon certain events of bankruptcy, obligations under
      the
      Credit Agreement would automatically accelerate. In addition, at any time that
      an event of default exists under the Credit Agreement, the Company will be
      required to pay interest on all amounts outstanding under the Credit Agreement
      at a default rate, which is equal to the then-prevailing interest rate under
      the
      Credit Agreement plus four percent per annum.




The
      Company is subject to various restrictive covenants under the Credit Agreement,
      including limitations on its ability to sell properties and assets, pay
      dividends, extend credit, amend material contracts, incur indebtedness, provide
      guarantees, effect mergers or acquisitions (other than to change its state
      of
      incorporation), cancel claims, create liens, create subsidiaries, amend its
      formation documents, make investments, enter into transactions with its
      affiliates, and enter into swap agreements. The Company must maintain (a) a
      current ratio of at least 1.0 (excluding from the calculation of current
      liabilities any loans outstanding under the Credit Agreement) and (b) a
      loan-to-value ratio greater than 1.0 to 1.0 for the term of the loan. As of
      June
      30, 2008, the Company is in compliance with all covenants under the Credit
      Agreement.




16




**Note
      6 – Income Taxes**





As
      of
      June 30, 2008, because the Company believes that it is more likely than not
      that
      its net deferred tax assets, consisting primarily of net operating losses,
      will
      not be utilized in the future, the Company has fully provided for a valuation
      of
      its net deferred tax assets.




The
      Company is subject to United States federal income tax and income tax from
      multiple state jurisdictions. Currently, the Internal Revenue Service is not
      reviewing any of the Company’s federal income tax returns, and agencies in
      states where the Company conducts business are not reviewing any of the
      Company’s state income tax returns. All tax years remain subject to examination
      by tax authorities, including for the period from February 4, 2004 through
      March
      31, 2008.





**Note
      7—Common Stock**





The
      Company’s capital stock as of June 30, 2008 and 2007 consists of 275,000,000
      authorized shares of common stock, par value $0.00001 per share.




Issuance
      of Common Stock




*For
      the Three Months Ended June 30, 2008*




During
      the three months ended June 30, 2008, the Company issued common stock as
      follows:




-
            250,000
                shares to an officer of the Company upon the exercise of stock
                options;-
            239,514
                shares to directors of the Company in exchange for
                services;




**Note
      8—Share-Based Compensation**




Chief
      Executive Officer (CEO) Options




During
      the three months ended June 30, 2008, the Company’s CEO exercised options to
      acquire 250,000 shares of common stock, for a cumulative exercise price of
      $2.50
      ($0.00001/share), received in cash by the Company.




2006
      Stock Incentive Plan




There
      were no options to purchase shares of common stock granted during the three
      months ended June 30, 2008. During the three months ended June 30, 2008, options
      to purchase 850,000 shares of common stock granted to employees expired. The
      options had exercise prices of $1.18 to $1.75.




Total
      estimated unrecognized compensation cost from unvested stock options as of
      June
      30, 2008 was approximately $136,000 which the Company expects to recognize
      over
      3.8 years. As of June 30, 2008 there were 581,000 options outstanding under
      the
      2006 Stock Incentive Plan and 9,419,000 options are available for issuance.




Restricted
      Stock Award




On
      April
      20, 2007, four new members were appointed to our Board of Directors. Each newly
      appointed director received a stock grant of 100,000 shares of the Company’s
      common stock that vests 20% (20,000 shares) on the date of grant with vesting
      20% per year thereafter. On May 31, 2007, the remaining independent Board member
      not covered by the April 20, 2007 award received a stock grant of 100,000 shares
      of the Company’s common stock that vests 20% (20,000 shares) on the date of
      grant with vesting 20% per year thereafter. Total estimated unrecognized
      compensation cost from unvested restricted stock as of June 30, 2008 was
      approximately $284,350 which the Company expects to recognize over 2.9
      years.




17




On
      May
      22, 2007, the Company issued 400,000 shares of common stock to the four new
      board members, and on June 26, 2007, the Company issued 100,000 shares of
      common stock to the remaining independent Board member. Pursuant to the vesting
      discussed above, for the three months ended June 30, 2008, $25,850 has been
      reflected as a charge to general and administrative expense in the statement
      of
      operations, with a corresponding credit to additional paid-in capital.





18




*Board
      of Director Fees*




On
      April
      20, 2007, the Board of Directors approved a resolution whereby members may
      receive stock in lieu of cash for Board meeting fees, Committee meeting fees
      and
      Committee Chairman fees.




For
      the
      three months ended June 30, 2008, board members elected to receive 239,514
      shares of common stock, respectively, in lieu cash, valued at $0.31 per share,
      the closing price of the Company’s stock on the date of grant. Total
      compensation for the three months ended June 30, 2008, of $74,250 has been
      reflected as a charge to general and administrative expense in the statement
      of
      operations, with a corresponding credit to additional paid-in
      capital.




**Note
      9—Subsequent Events**




On
      August
      7, 2008, the Company retained Growth Capital Partners, L.P. as the Company’s
      financial advisor to consider strategic alternatives, including the possible
      sale of the Company. Growth Capital Partners will assist the Company in
      exploring various sale, financing and other alternatives. The process may take
      several months, and may not result in any transactions.





19





**Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations**




**Forward-Looking
      Statements**




The
      statements contained in this Quarterly Report on Form 10-Q that are not
      historical are “forward-looking statements”, as that term is defined in Section
      21E of the Securities Exchange Act of 1934, as amended (the Exchange Act),
      that
      involve a number of risks and uncertainties. These forward-looking statements
      include, among others, the following:





·
            business
                strategy;


·
            ability
                to complete a sale of the Company, all or a significant portion of
                its
                assets or financing or other strategic
                alternatives;


·
            ability
                to obtain the financial resources to repay secured debt and to conduct
                the
                EOR projects;


·
            water
                availability and waterflood production targets;


·
            carbon
                dioxide (CO2)
                availability, deliverability, and tertiary production targets;


·
            construction
                of surface facilities for waterflood and CO2operations
                and a CO2pipeline;


·
            inventories,
                projects, and programs;


·
            other
                anticipated capital expenditures and budgets;


·
            future
                cash flows and borrowings;


·
            the
                availability and terms of financing;


·
            oil
                reserves;


·
            reservoir
                response to water and CO2injection;


·
            ability
                to obtain permits and governmental approvals;


·
            technology;


·
            financial
                strategy;


·
            realized
                oil prices;


·
            production;


·
            lease
                operating expenses, general and administrative costs, and finding
                and
                development costs;


·
            availability
                and costs of drilling rigs and field services;


·
            future
                operating results;


·
            plans,
                objectives, expectations, and intentions; and


·
            terms
                of and ability to close the proposed letter of intent financing
                arrangement.




These
      statements may be found under “Management’s Discussion and Analysis of Financial
      Condition and Results of Operations”, and other sections of this Quarterly
      Report on Form 10-Q. Forward-looking statements are typically identified by
      use
      of terms such as “may”, “could”, “should”, “expect”, “plan”, “project”,
“intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”,
“target” or “continue”, the negative of such terms or other comparable
      terminology, although some forward-looking statements may be expressed
      differently.




20




The
      forward-looking statements contained in this Quarterly Report on Form 10-Q
      are
      largely based on our expectations, which reflect estimates and assumptions
      made
      by our management. These estimates and assumptions reflect our best judgment
      based on currently known market conditions and other factors. Although we
      believe such estimates and assumptions to be reasonable, they are inherently
      uncertain and involve a number of risks and uncertainties that are beyond our
      control. In addition, management’s assumptions about future events may prove to
      be inaccurate. Management cautions all readers that the forward-looking
      statements contained in this Quarterly Report on Form 10-Q are not
      guarantees of future performance, and we cannot assure any reader that such
      statements will be realized or the forward-looking events and circumstances
      will
      occur. Actual results may differ materially from those anticipated or implied
      in
      the forward-looking statements due to the factors listed in the “Risk Factors”
section and elsewhere in our Annual Report on Form 10-K for the fiscal year
      ended March 31, 2008. All forward-looking statements speak only as of the date
      of this Quarterly Report on Form 10-Q. We do not intend to publicly update
      or
      revise any forward-looking statements as a result of new information, future
      events or otherwise. These cautionary statements qualify all forward-looking
      statements attributable to us or persons acting on our behalf.




**Organization**




Rancher
      Energy is an independent energy company which explores for and develops,
      produces, and markets oil and gas in North America. Prior to April 2006, Rancher
      Energy, formerly known as Metalex Resources, Inc. (“Metalex”), was engaged in
      the exploration of a gold prospect in British Columbia, Canada. Metalex found
      no
      commercially exploitable deposits or reserves of gold. During April 2006,
      stockholders voted to change the name to Rancher Energy Corp. We operate three
      fields in the Powder River Basin, Wyoming, which is located in the Rocky
      Mountain region of the United States. The fields, acquired in December 2006 and
      January 2007, are the South Glenrock B Field, the Big Muddy Field, and the
      Cole
      Creek South Field. All three fields currently produce some oil and are
      waterflood or CO 2 tertiary
      recovery candidates. We plan to substantially increase production in our fields
      by using waterflood, CO 2 injection
      and other enhanced oil recovery (EOR) techniques. To fund the acquisition of
      the
      three fields and our operating expenses, from June 2006 through January 2007,
      we
      sold $89.3 million of our securities in two private placements. In December
      2006, we also entered into an agreement with Anadarko Petroleum Corporation
      to
      supply us with CO 2 needed
      to
      conduct CO 2 tertiary
      recovery operations in our three fields. In February 2008, we entered into
      a
      Carbon Dioxide Sale and Purchase Agreement with ExxonMobil Gas and Power
      Marketing (ExxonMobil), a division of ExxonMobil Corporation, to supply
      additional CO 2 to
      the
      three fields. We are seeking financing or strategic joint venture partners
      to
      enable us to construct a pipeline to deliver CO 2 to our
      fields and to drill additional wells and construct necessary infrastructure
      improvements in order to implement Enhanced Oil Recovery (EOR)
      techniques.




**Outlook
      for the Coming Year**




The
      following summarizes our goals and objectives for the next twelve
      months:




●
            In
                conjunction with the recently retained financial advisor, explore
                various
                sale, and other strategic financing alternatives to refinance or
                repay the
                debt due in October 2008 and to provide funding for a CO2pipeline and our EOR development plan for our three
                fields;●
            Maintain
                and enhance crude oil production from our existing
                wells;●
            Initiate
                development activities in our
                fields.




Our
      plans
      for EOR development of our oil fields are dependent on our obtaining substantial
      additional funding. In October 2007 we raised approximately $12.2 million in
      short-term debt financing to enhance production and provide cash reserves.
      While
      we had intended to raise a long-term debt financing in 2007 to further our
      waterflood and CO 2 EOR
      plans, weakness in the capital market conditions contributed to our change
      in
      strategy to raise the short-term financing first, followed by either long-term
      debt financing, or a strategic partnering arrangement with experienced industry
      partners. The raising of future funding is dependent on many factors, some
      of
      which are outside our control and are not assured. One major factor is the
      level
      of and projected trends in oil prices, which we cannot protect against by using
      hedging at this time .




21




We
      entered into a letter of intent in April 2008 with two experienced industry
      operators (the “industry partners”) under which one partner will earn up to a
      55% working interest in out three fields by investing up to $83.5 million in
      our
      CO 2 enhanced
      oil recovery (EOR) program the three fields and the other partner will build,
      own and operate a pipeline to transport CO 2 to our
      fields. We continue to negotiate the terms of a definitive agreement, but there
      is no assurance that we will be successful in these negotiations and in closing
      the transaction. Under the terms of the letter of intent, because the parties
      had not entered into a definitive agreement by June 30, 2008, either party
      may
      terminate the letter of intent upon ten days notice. If we are not successful
      in
      consummating a transaction with an industry partner, we will need to obtain
      other sources of financing. On July 25, 2008, we entered into an amendment
      to
      the letter of intent with the industry partners that waived the provisions
      restricting us from entering into negotiations with other parties for the
      disposition or financing of all of part of the properties covered by the letter
      of intent.




On
      August
      7, 2008, the Company retained Growth Capital Partners, L.P. as the Company’s
      financial advisor to consider strategic alternatives, including the possible
      sale of the Company. Growth Capital Partners will assist the Company in
      exploring various sale, financing and other alternatives. The process is
      expected to take several months, and there is no assurance that any such
      transaction will be completed. If we are not successful in completing a
      transaction, we will need to obtain other sources of financing.





**Results
      of Operations**




*Three
      Months Ended June 30, 2008 Compared to Three Months June 30,
      2007.*




The
      following is a comparative summary of our results of operations:





Three Months Ended June 30,2008
            
            2007Revenues:Oil
                production (in barrels)
            
            
            16,083
            
            
            22,434Net
                oil price (per barrel)
            
            $
            118.07
            
            $
            59.31Oil
                sales
            
            $
            1,898,967
            
            $
            1,330,479Losses
                on derivative activities
            
            
            (1,895,293
            )
            
            —Total
                revenues
            
            
            3,674
            
            
            1,330,479Operating
                expenses:Production
                taxes
            
            
            230,283
            
            
            161,469Lease
                operating expenses
            
            
            623,421
            
            
            588,233Depreciation,
                depletion, amortization and accretion
            
            
            275,841
            
            
            331,532Accretion
                expense
            
            
            46,276
            
            
            45,990Exploration
                expense
            
            
            9,604
            
            
            41,158General
                and administrative expense
            
            
            1,048,376
            
            
            2,539,992Total
                operating expenses
            
            
            2,233,801
            
            
            3,708,374Loss
                from operations
            
            
            (2,230,127
            )
            
            (2,377,895
            )Other
                income (expense):Liquidated
                damages pursuant to registration rights arrangement
            
            
            -
            
            
            (1,377,110
            )Interest
                expense and financing costs
            
            
            (1,680,470
            )
            
            (71,239
            )Interest
                and other income
            
            
            10,581
            
            
            48,323Total
                other income (expense)
            
            
            (1,669,889
            )
            
            (1,400,026
            )Net
                loss
            
            $
            (3,900,016
            )
            $
            (3,777,921
            )





22




*Overview* .
      For the
      three months ended June 30, 2008, we reported a net loss of $3,900,016, or
      $0.03
      per basic and fully-diluted share, compared to a net loss of
      $3,777,921 , or $0.04
      per basic and fully-diluted share, for the corresponding three months of 2007.
      Discussions of individually significant period to period variances follow.




*Revenue,
      production taxes, and lease operating expenses* .
      For the
      three months ended June 30, 2008, we recorded crude oil sales of $1,898,967
      on
      16,083 barrels of oil at an average price of $118.07, as compared to revenues
      of
      $1,330,479 on 22,434 barrels of oil at an average price of $59.31 per barrel
      in
      2007. The year-to-year variance reflects a volume variance of $(749,881) and
      a
      price variance of  $1,318,370. The decreased volume in 2008 reflects
      mechanical production problems resulting in the loss of several producing wells
      and curtailed production from other wells while flowline repairs were carried
      out, coupled with overall production decline from year to year. Production
      taxes
      (including ad valorem taxes) of $230,283 in 2008 as compared to $161,469 in
      2007, remained constant at 12% of crude oil sales revenues. Lease operating
      expenses increased to $623,421 ($38.76/bbl) in 2008 as compared to $588,233
      ($26.22/bbl). The per barrel increase in 2008 compared to 2007 reflects costs
      incurred on repair and maintenance of flowlines and efforts carried out to
      slow
      and eventually reverse the production decline experienced during the winter
      and
      spring months.




*Losses
      on risk management activities.* In
      connection with short term debt financing entered into in October 2007, we
      entered into a crude oil derivative contract with an unrelated counterparty
      to
      set a price floor of $63 per barrel for 75% of our estimated crude oil
      production for the next two years, and a price ceiling of $83.50 for 45% of
      the
      same level of production. During the three months ended June 30, 2008 we
      recorded total losses on the derivative activities of $1,895,293, comprised
      of
      $350,479 of realized losses and $1,544,814 of unrealized losses.




*Depreciation,
      depletion, amortization and accretion* .
      For the
      three months ended June 30, 2008, we reflected depreciation, depletion, and
      amortization of $275,841 ($225,784, $17.15/bbl, related to oil and gas
      properties, and $50,057 related to other assets) as compared to $331,532
      ($300,506, $14.78/bbl related to oil and gas properties, and $31,026 related
      to
      other assets) for the corresponding three months ended June 30, 2007. The year
      to year increase in dollars per barrel primarily reflects the increased base
      of
      proved property costs being amortized in 2008 as compared to 2007.




*General
      and administrative expense* .
      For the
      three months ended June 30, 2008, we reflected general and administrative
      expenses of $1,048,376 as compared to $2,539,992 for the corresponding three
      months ended June 30, 2007. The decrease reflects a general lower level of
      activity in 2008 compared to 2007 and staff reductions carried out in March
      and
      April of 2008. As of June 30, 2008 we had six employees in the corporate office
      and three in the field office in Wyoming as compared to nineteen and five,
      respectively, as of June 30, 2007. Salaries and benefit costs for the three
      months ended June 30, 2008 were $404,000 as compared to $720,000 for the same
      period in 2007. Stock based compensation expense was reduced to $118,000 in
      2008
      as compared to $343,000 in 2007 reflecting the expiration of stock options
      to
      terminated employees. In addition to personnel related cost reductions we
      implemented cost saving measures in several other cost categories including:
      1)
      lower accounting and financial reporting contractor fees of $58,000 in 2008
      compared to $179,000 in 2007; 2) lower travel and entertainment costs of $20,000
      in 2008 compared to $94,000 in 2007; 3) lower legal fees of $62,000 in 2008
      compared to $192,000 in 2007; and 4) lower recruiting fees of zero in 2008
      compared to $221,000 in 2007.




*Interest
      expense and financing costs.* For
      the
      three months ended June 30, 2008, we reflected interest expense and financing
      costs of $1,680,470 as compared to $71,239 for the corresponding three months
      ended June 30, 2007. The 2008 amount is comprised of interest paid on the Note
      Payable issued in October 2007 of $371,295, and amortization of deferred
      financing costs and discount on Note Payable of $1,309,175. The interest expense
      in 2007 consisted of imputed interest on registration rights
      payments.




23




**Liquidity
      and Capital Resources**




*Going
      Concern*




The
      report of our independent registered public accounting firm on the financial
      statements for the year ended March 31, 2008 includes an explanatory paragraph
      relating to the uncertainty of our ability to continue as a going concern.
      We
      have incurred a cumulative net loss of $26.3 million for the period from
      inception (February 4, 2004) to June 30, 2008 and have a working capital deficit
      of approximately $8.1 million as of June 30, 2008 and have short term debt
      in the amount of $12.2 million scheduled to mature on October 31, 2008. We
      require significant additional funding to repay the short term debt and sustain
      our operations for our planned EOR operations. Our ability to continue the
      Company as a going concern is dependent upon our ability to obtain additional
      funding in order to pay our short term debt and finance our planned
      operations.




Our
      primary source of liquidity to meet operating expenses and fund capital
      expenditures is our access to debt and equity markets. The debt and equity
      markets, public, private, and institutional, have been our principal source
      of
      capital used to finance a significant amount of growth, including acquisitions.
      We will need substantial additional funding to pursue our business
      plan.




In
      October 2007, we issued $12,240,000 of short term debt the proceeds of which
      were intended to enhance our existing production and to provide cash reserves
      for operations. The debt matures in October 2008 and as part of the loan, we
      granted to the lender a mortgage on our interests in three fields and our other
      assets. We had planned to secure longer term fixed rate financing to repay
      the
      short term debt and to commence our EOR development activities in the three
      fields of the Powder River Basin; however, due to difficulties in the capital
      debt markets, we have been unable to secure such financing. We do not have
      cash
      available to repay this loan. We plan to refinance this loan and borrow
      additional funds to pursue our business strategy. If we are not successful
      in
      repaying this debt within the term of the loan, or default under the terms
      of
      the loan, the lender will be able to foreclose one or more of our three
      properties and other assets and we could lose the properties. A foreclosure
      could significantly reduce or eliminate our property interests, or force us
      to
      alter our business strategy, which could involve the sale of properties or
      working interests in the properties and adversely affect our results of
      operations and financial condition.




In
      April
      2008 we entered into a letter of intent with two perspective industry partners
      for them to invest up to $83.5 million (including $12.2 million up front to
      retire our short term debt), and to earn up to 55% working interest in our
      fields. It also calls for them to build, own and operate a 132 mile
      CO 2 pipeline
      to deliver CO 2 to
      our
      fields. We are continuing negotiations with them but there is no assurance
      that
      we will be successful in closing the transaction. Under the terms of the letter
      of intent, if the parties have not entered into a definitive agreement by June
      30, 2008, either party may terminate the letter of intent upon ten days notice.
      In July 2008 we and the industry partners amended the letter of intent to waive
      the provisions restricting us from entering into negotiations with other parties
      for the disposition or financing of all of part of the properties covered by
      the
      letter of intent. If we are not successful in consummating this transaction,
      we
      will need to make other financing arrangements to carry out our EOR business
      strategy.




Beginning
      in March 2008, we began to reduce our level of staffing by laying off several
      employees whose positions were considered to be redundant based upon the
      anticipated closing of a farmout transaction with experienced industry
      operators. Following these staff reductions and other cost-cutting measures
      in
      both the field and in our corporate headquarters, our monthly oil and gas
      production revenue should be adequate to cover expected monthly field operating
      costs, production taxes and general and administrative expenses; however, the
      monthly interest payments required on the short term debt and payments relating
      to our crude oil hedging position currently result in negative cash flow each
      month.




On
      August
      7, 2008, the Company retained Growth Capital Partners, L.P. as the Company’s
      financial advisor to consider strategic alternatives, including the possible
      sale of the Company. Growth Capital Partners will assist the Company in
      exploring various sale, financing and other alternatives. The process
      may take several months. If we are not successful in completing a
      transaction, we will need to obtain other sources of financing.




24




*Cash
      Flows*




The
      following is a summary of Rancher Energy’s comparative cash flows:




For the Three Months Ended
              June 30,2008
            
            2007Cash
                flows from:Operating
                activities
            
            $
            (1,181,558
            )
            $
            (1,877,791
            )Investing
                activities
            
            $
            (347,642
            )
            $
            (47,560
            )Financing
                activities
            
            $
            (113,250
            )
            $
            (98,561
            )




Cash
      flows used for operating activities decreased slightly as a result of lower
      general and administrative expenses as discussed above, partially offset by
      payments to settle derivative activity losses and interest expense incurred
      in
      connection with the October 2007 short term financing.




Cash
      flows used for investing activities increased in the 2008 period compared to
      the
      2007 period primarily reflecting the lack of proceeds from the conveyance of
      unproved oil and gas properties in 2008 as compared to the 2007 period when
      we
      recorded such proceeds in the amount of $525,000.




*Off-Balance
      Sheet Arrangements* **




Under
      the
      terms of the Term Credit Agreement entered into in October 2007 we were required
      to hedge a portion of our expected production and we entered into a costless
      collar agreement for a portion of our anticipated future crude oil production.
      The costless collar contains a fixed floor price (put) and ceiling price
      (call). If the index price exceeds the call strike price or falls below the
      put
      strike price, we receive the fixed price and pay the market price. If the market
      price is between the call and the put strike price, no payments are due from
      either party. During the three months ended June 30, 2008 we reflected realized
      losses of $350,479 and unrealized losses of $1,544,814 from the hedging
      activity.




We
      have
      no other off-balance sheet financing nor do we have any unconsolidated
      subsidiaries.




*Critical
      Accounting Policies and Estimates*




Critical
      accounting policies and estimates are provided in Part II, Item 7, Management’s
      Discussion and Analysis of Financial Condition and Results of Operations, to
      the
      Annual Report on Form 10-K for the fiscal year ended March 31, 2008. Additional
      footnote disclosures are provided in Notes to Consolidated Financial Statements
      in Part I, Financial Information, Item 1, Financial Statements to this Quarterly
      Report on Form 10-Q for the three months ended June 30, 2008.




25




**Item
      3. Quantitative and Qualitative Disclosure About Market Risk.**




*Commodity
      Price Risk*




Because
      of our relatively low level of current oil and gas production, we are not
      exposed to a great degree of market risk relating to the pricing applicable
      to
      our oil production. However, our ability to raise additional capital at
      attractive pricing, our future revenues from oil and gas operations, our future
      profitability and future rate of growth depend substantially upon the market
      prices of oil and natural gas, which fluctuate widely. With increases to our
      production, exposure to this risk will become more significant. We expect
      commodity price volatility to continue. In connection with our short term
      financing in October 2007, we entered into an oil hedge agreement covering
      approximately 75% of our proved developed producing reserves scheduled to be
      produced during a two-year period. Terms of future debt facilities may also
      require that we hedge a portion of our expected future production.




26





**Item
      4.**  **Controls
      and Procedures** .




*Disclosure
      Controls and Procedures*




We
      conducted an evaluation under the supervision and with the participation of
      our
      management, including our Chief Executive Officer and Chief Accounting Officer,
      of the effectiveness of the design and operation of our disclosure controls
      and
      procedures. The term “disclosure controls and procedures,” as defined in Rules
      13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended
      (Exchange Act), means controls and other procedures of a company that are
      designed to ensure that information required to be disclosed by the Company
      in
      the reports it files or submits under the Exchange Act is recorded, processed,
      summarized and reported, within the time periods specified in the Securities
      and
      Exchange Commission’s rules and forms. Disclosure controls and procedures also
      include, without limitation, controls and procedures designed to ensure that
      information required to be disclosed by a company in the reports that it files
      or submits under the Exchange Act is accumulated and communicated to the
      company’s management, including its principal executive and principal financial
      officers, or persons performing similar functions, as appropriate to allow
      timely decisions regarding required disclosure. We identified a material
      weakness in our internal control over financial reporting. The material weakness
      involved inadequate segregation of duties within our Accounting Department
      due
      to an insufficient complement of staff and inadequate management oversight.
      Specifically the weakness involved the creation of journal entries and note
      disclosures without adequate independent review and authorization. As a result
      of this material weakness, we concluded as of March 31, 2008 and as of the
      end
      of the period covered by this Quarterly Report on Form 10-Q, that our disclosure
      controls and procedures were not effective.




**Changes
      in Internal Control over Financial Reporting**




There
      have been no changes in our internal control over financial reporting during
      the
      most recently completed fiscal quarter that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.





27




**PART
      II. OTHER INFORMATION.**




**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.**




On
      June
      30, 2008, pursuant to our compensation arrangement with our non-employee
      directors, we issued 239,514 shares of our common stock in the aggregate under
      our 2006 Stock Incentive Plan to our non-employee directors for their service
      on
      our Board of Directors and for attending board and committee meetings, as the
      case may be. More specifically, we issued to the following directors the shares
      specified: (i) William A. Anderson, 53,225 shares; (ii) Joseph P. McCoy, 60,484
      shares; (iii) Patrick M. Murray, 36,290 shares; (iv) Myron M. Sheinfeld, 36,290
      shares, and (v) Mark Worthey, 53,225 shares. The foregoing issuances were made
      pursuant to Section 4(2) of the Securities Act.





28




**ITEM
      6. EXHIBITS.**




**EXHIBIT
      INDEX**


**Exhibit**
              
              **Description**3.1
              
              Amended
                  and Restated Articles of Incorporation(1)3.2
              
              Articles
                  of Correction(2)3.3
              
              Amended
                  and Restated Bylaws(3)4.1
              
              Form
                  of Stock Certificate for Fully Paid, Non-Assessable Common Stock
                  of the
                  Company(4)4.2
              
              Form
                  of Unit Purchase Agreement(3)4.3
              
              Form
                  of Warrant Certificate(3)4.4
              
              Form
                  of Registration Rights Agreement, dated December 21, 2006(5)4.5
              
              Form
                  of Warrant to Purchase Common Stock(5)10.1
              
              Burke
                  Ranch Unit Purchase and Participation Agreement between Hot Springs
                  Resources Ltd. and PIN Petroleum Partners Ltd., dated February 6,
                  2006(6)10.2
              
              Employment
                  Agreement between John Works and Rancher Energy Corp., dated June 1,
                  2006(7)10.3
              
              Assignment
                  Agreement between PIN Petroleum Partners Ltd. and Rancher Energy
                  Corp.,
                  dated June 6, 2006(7)10.4
              
              Loan
                  Agreement between Enerex Capital Corp. and Rancher Energy Corp.,
                  dated
                  June 6, 2006(7)10.5
              
              Letter
                  Agreement between NITEC LLC and Rancher Energy Corp., dated June 7,
                  2006(7)10.6
              
              Loan
                  Agreement between Venture Capital First LLC and Rancher Energy
                  Corp.,
                  dated June 9, 2006(8)10.7
              
              Exploration
                  and Development Agreement between Big Snowy Resources, LP and Rancher
                  Energy Corp., dated June 15, 2006(7)10.8
              
              Assignment
                  Agreement between PIN Petroleum Partners Ltd. and Rancher Energy
                  Corp.,
                  dated June 21, 2006(7)10.9
              
              Purchase
                  and Sale Agreement between Wyoming Mineral Exploration, LLC and
                  Rancher
                  Energy Corp., dated August 10, 2006(6)10.10
              
              South
                  Glenrock and South Cole Creek Purchase and Sale Agreement by and
                  between
                  Nielson & Associates, Inc. and Rancher Energy Corp., dated
                  October 1, 2006(9)10.11
              
              Rancher
                  Energy Corp. 2006 Stock Incentive Plan(9)10.12
              
              Rancher
                  Energy Corp. 2006 Stock Incentive Plan Form of Option Agreement(9)10.13
              
              Denver
                  Place Office Lease between Rancher Energy Corp. and Denver Place
                  Associates Limited Partnership, dated October 30, 2006(10)10.14
              
              Finder’s
                  Fee Agreement between Falcon Capital and Rancher Energy Corp.(11)10.15
              
              Amendment
                  to Purchase and Sale Agreement between Wyoming Mineral Exploration,
                  LLC
                  and Rancher Energy Corp.(12)10.16
              
              Letter
                  Agreement between Certain Unit Holders and Rancher Energy Corp.,
                  dated
                  December 8, 2006(3)10.17
              
              Letter
                  Agreement between Certain Option Holders and Rancher Energy Corp.,
                  dated
                  December 13, 2006(3)10.18
              
              Product
                  Sale and Purchase Contract by and between Rancher Energy Corp.
                  and the
                  Anadarko Petroleum Corporation, dated December 15, 2006(13)10.19
              
              Amendment
                  to Purchase and Sale Agreement between Nielson & Associates, Inc. and
                  Rancher Energy Corp.(14)10.20
              
              Securities
                  Purchase Agreement by and among Rancher Energy Corp. and the Buyers
                  identified therein, dated December 21, 2006(5)10.21
              
              Lock-Up
                  Agreement between Rancher Energy Corp. and Stockholders identified
                  therein, dated December 21, 2006(5)10.22
              
              Voting
                  Agreement between Rancher Energy Corp. and Stockholders identified
                  therein, dated as of December 13, 2006(5)10.23
              
              Form
                  of Convertible Note(15)


29


**Exhibit**
              
              **Description**


10.24
              
              First
                  Amendment to Securities Purchase Agreement by and among Rancher
                  Energy
                  Corp. and the Buyers identified therein, dated as of January 18, 2007(16)10.25
              
              Rancher
                  Energy Corp. 2006 Stock Incentive Plan Form of Restricted Stock
                  Agreement(17)10.26
              
              First
                  Amendment to Employment Agreement by and between John Works and
                  Rancher
                  Energy Corp., dated March 14, 2007(18)10.27
              
              Employment
                  Agreement between Richard Kurtenbach and Rancher Energy Corp.,
                  dated
                  August 3, 2007(19)10.28
              
              Term
                  Credit Agreement between Rancher Energy Corp. and GasRock Capital
                  LLC,
                  dated as of October 16, 2007(20)10.29
              
              Term
                  Note made by Rancher Energy Corp. in favor of GasRock Capital LLC,
                  dated
                  October 16, 2007(20)10.30
              
              Mortgage,
                  Security Agreement, Financing Statement and Assignment of Production
                  and
                  Revenues from Rancher Energy Corp. to GasRock Capital LLC, dated
                  as of
                  October 16, 2007(20)10.31
              
              Security
                  Agreement between Rancher Energy Corp. and GasRock Capital LLC,
                  dated as
                  of October 16, 2007(20)10.32
              
              Conveyance
                  of Overriding Royalty Interest by Rancher Energy Corp. in favor
                  of GasRock
                  Capital LLC, dated as of October 16, 2007(20)10.33
              
              ISDA
                  Master Agreement between Rancher Energy Corp. and BP Corporation
                  North
                  America Inc., dated as of October 16, 2007(20)10.34
              
              Restricted
                  Account and Securities Account Control Agreement by and among Rancher
                  Energy Corp., GasRock Capital LLC, and Wells Fargo Bank, National
                  Association, dated as of October 16, 2007(20)
 10.35
              
              Intercreditor
                  Agreement by and among Rancher Energy Corp., GasRock Capital LLC,
                  and BP
                  Corporation North America Inc., dated as of October 16, 2007(20)10.36
              
              First
                  Amendment to Denver Place Office lease between Rancher Energy Corp.
                  and
                  Denver Place Associates Limited Partnership, dated March 6, 2007(18)10.37
              
              Carbon
                  Dioxide Sale & Purchase Agreement between Rancher Energy Corp. and
                  ExxonMobil Gas & Power Marketing Company, dated effective as of
                  February 1, 2008 (Certain portions of this agreement have been
                  redacted
                  and have been filed separately with the Securities and Exchange
                  Commission
                  pursuant to a Confidential Treatment Request).(21)31.1
              
              Certification
                  Pursuant to Rule 13a-14(a)/15d-14(a) (Chief Executive
                  Officer)*31.2
              
              Certification
                  Pursuant to Rule 13a-14(a)/15d-14(a) (Chief Accounting
                  Officer)*32.1
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002*32.2
              
              Certification
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002*
  *
        Filed
        herewith.
  (1)
              Incorporated
                  by reference from our Current Report on Form 8-K filed on April 3,
                  2007.(2)
              Incorporated
                  by reference from our Form 10-Q for the quarterly period ended
                  September
                  30, 2007.
  (3)
              Incorporated
                  by reference from our Current Report on Form 8-K filed on
                  December 18, 2006.
  (4)
              Incorporated
                  by reference from our Form SB-2 Registration Statement filed on
                  June 9, 2004.




30




(5)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on
                    December 27, 2006.
 
 (6)
                Incorporated
                    by reference from our Quarterly Report on Form 10-Q/A filed on
                    August 28, 2006.
  (7)
                Incorporated
                    by reference from our Annual Report on Form 10-K filed on June 30,
                    2006.
  (8)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on June 21,
                    2006.(9)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on October 6,
                    2006.
 
 (10)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on November 9,
                    2006.
  (11)
                Incorporated
                    by reference from our Current Report on Form 8-K/A filed on
                    November 14, 2006.
 
 (12)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on December 4,
                    2006.(13)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on
                    December 22, 2006.
 
 (14)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on
                    December 27, 2006.(15)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on January 8,
                    2007.
 
 (16)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on January 25,
                    2007.(17)
                Incorporated
                    by reference from our Annual Report on Form 10-K filed on June 29,
                    2007.
 
 (18)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on March 20,
                    2007.
 
 (19)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on August
                    7,
                    2007.(20)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on October
                    17,
                    2007.
 
 (21)
                Incorporated
                    by reference from our Current Report on Form 8-K filed on February
                    14,
                    2008.


31




**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.




**R****ANCHER
                ENERGY CORP.**(Registrant)Dated:
                August 14, 2008
            By:
            /s/
              John WorksJohn
                Works President, Chief Executive Officer, ChiefFinancial
                Officer, Secretary and Treasurer (PrincipalExecutive
                Officer)Dated:
                August 14, 2008
            By:
            /s/
              Richard KurtenbachRichard
                E. KurtenbachChief
                Accounting Officer (Principal AccountingOfficer)




32