TERM
      NOTE

    (this
      “Note”)

     

    
      	
              $12,240,000.00

            	
              Houston,
                Texas

            	
              Effective
                October 16, 2007

            


    

     

    FOR
      VALUE
      RECEIVED,
      RANCHER ENERGY CORP., a
      Nevada
      corporation (“Borrower”),
      unconditionally promises to pay to the order of GASROCK
      CAPITAL LLC,
      a
      Delaware limited liability company (“Lender”), on
      or
      before the Maturity Date,
      the
      principal amount of $12,240,000.00 or so much thereof as may then be outstanding
      under this Note, together with interest, in accordance with the Credit
      Agreement, as described below.

     

    This
      Note
      has been executed and delivered under, and is subject to the terms of, that
      certain Term Credit Agreement dated as of the date hereof, between Borrower
      and
      Lender (as amended, restated or supplemented from time to time, the
“Credit
      Agreement”),
      and
      is the “Note”
      referred to in the Credit Agreement. Unless defined in this Note, or the context
      requires otherwise, capitalized terms used in this Note have the meanings given
      them in the Credit Agreement.

     

    Reference
      is made to the Credit Agreement for provisions affecting this Note regarding
      applicable interest rates, principal and interest payment dates, final maturity,
      voluntary and mandatory prepayments, acceleration of maturity, exercise of
      rights, payment of attorneys’ fees, court costs and other costs of collection,
      certain waivers by Borrower and others now or hereafter obligated for payment
      of
      any sums due under this Note, and security for the payment of this Note. This
      Note is a Loan Document, as defined in the Credit Agreement.

     

    This
      Note
      is secured by the Security Documents, as defined in the Credit Agreement,
      including those executed simultaneously with the execution of the Credit
      Agreement, those executed heretofore and those hereafter executed.

     

    Borrower
      and all sureties, endorsers and guarantors of this Note waive demand,
      presentment for payment, notice of nonpayment, protest, notice of protest,
      notice of intent to accelerate maturity, notice of acceleration of maturity,
      and
      all other notices, filing of suit and diligence in collecting this Note or
      enforcing any of the security therefore, and agree to any substitution, exchange
      or release of any such security or the release of any party primarily or
      secondarily liable hereon and further agrees that it will not be necessary
      for
      Lender, in order to enforce payment of this Note by them, to first institute
      suit or exhaust its remedies against any Borrower or others liable hereunder,
      or
      to enforce its rights against any security herefor, and consent to any one
      or
      more extensions or postponements of time of payment of this Note on any terms
      or
      any other indulgences with respect hereto, without notice thereof to any of
      them. Lender may transfer this Note in accordance with the terms of the Credit
      Agreement, and the rights and privileges of Lender under this Note shall inure
      to the benefit of Lender’s representatives, successors or assigns.

     

    The
      obligations of Borrower under this Note are to be performed in the State of
      Texas and this Note shall be governed by and construed in accordance with the
      laws of the State of Texas, without giving effect to its principles of conflicts
      of laws.

     

    Notwithstanding
      the foregoing, in no event shall Chapter 346 of the Texas Finance Code (which
      regulates certain revolving loan accounts and revolving tri-party accounts)
      apply to this Note. To the extent that Chapter 303 of the Texas Finance Code
      is
      applicable to this Note, the “weekly ceiling” specified in such Chapter 303 is
      the applicable ceiling; provided that, if any Applicable Law permits greater
      interest, the law permitting the greatest interest shall apply.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Specific
      reference is made to Section
      11.7
      of the
      Credit Agreement for additional usury savings provisions.


     

    [Signature
      is on the following page.]

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Executed
      effective on the date first set forth above.

     

    


    RANCHER
      ENERGY CORP.,

    a
      Nevada
      corporation

    


    


    By: _/s/
      John Works____________    

    John
      Works

    President
      & Chief Executive Office

     

     

    Signature
      Page to Note