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Rancher Energy Corp. Announces First Quarter Fiscal 2009 Financial Results

Rancher Energy Corp. (OTCBB: RNCH) today announced financial results for its first fiscal quarter ended June 30, 2008.

Rancher Energy reported oil sales of $1.9 million in the first quarter as compared with oil sales of $1.3 million in the same quarter a year ago. The increase was attributable to a higher average sales price of $118.07 per barrel versus $59.31 per barrel in the first quarter of 2007. The Company sold 16,083 barrels of oil in the first quarter, which represents its net interest in its properties, down from 22,434 barrels in the same quarter last year due to mechanical production problems that curtailed production from certain wells during the quarter while flowline repairs were made. Total oil sales were offset by losses on risk management activities related to a short-term debt financing the Company entered into in October of 2007.

Total operating expenses in the first quarter decreased to $2.2 million from $3.7 million in the same quarter last year. General and administrative expense decreased by $1.5 million, or 40%, to $1.0 million from $2.5 million last year, reflecting lower headcount and related costs, lower professional fees and generally reduced overhead costs. Lower general and administrative costs, in combination with lower depreciation, depletion and amortization costs, more than offset increases in production taxes and lease operating expenses. The Company reported a net loss of $3.9 million, or $0.03 per basic and diluted share, versus a net loss of $3.8 million, or $0.04 per basic and diluted share, in the same quarter last year. The net loss of $3.9 million included $1.3 million in amortization of deferred financing costs, $1.9 million in derivative losses and nearly $500,000 in non-cash depreciation, depletion, amortization and stock-based compensation. Rancher Energy closed the first quarter with cash and cash equivalents of $5.2 million, down from $6.8 million at fiscal year end March 31, 2008.

"During the first quarter we made good progress bringing total operating expenses more in line with oil sales as we continued to evaluate options to fund the CO2 recovery phase of our enhanced oil recovery (EOR) program," said John Works, President & CEO of Rancher Energy. "More recently we engaged an investment bank to serve as the Company's financial advisor to consider strategic alternatives to maximize the value of our considerable asset base, which includes three promising oil fields in the Powder River Basin and a CO2 contract with ExxonMobil."

About Rancher Energy Corp.

Rancher Energy is an innovative oil & gas exploration & development company with a targeted strategy to reinvigorate older, historically productive oil fields in the hydrocarbon-rich Rocky Mountain region of the United States. Using waterflood injection and CO2 flooding, coupled with other leading edge hydrocarbon recovery techniques such as 3-D seismic data and directional drilling, Rancher Energy expects to extract proven in-place oil that remains behind in mature fields. Rising energy demand and strong oil & gas prices combined with advances in oil recovery have made this strategy profitable. Rancher Energy is taking advantage of this convergence by acquiring low risk, high quality, historically productive plays with under-exploited reserves and developing customized enhanced recovery strategies to maximize production.

Forward-Looking Statements

This press release includes forward-looking statements as determined by the U.S. Securities and Exchange Commission (the "SEC"). All statements, other than statements of historical facts, included in this press release that address activities, events, or developments that the Company believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include the Company's ability to obtain financing to implement its waterflood plan, to construct pipeline and other infrastructure, and for other operational and working capital purposes, the uncertainty of recovery factors for the enhanced oil recovery projects, the volatility of oil prices, general economic and business conditions, and other factors over which the Company has little or no control. The Company does not intend (and is not obligated) to update publicly any forward-looking statements. The contents of this press release should be considered in conjunction with the warnings and cautionary statements contained in the Company's recent filings with the SEC.

Rancher Energy Corp.
Consolidated Statements of Operations
(Unaudited)
                                                    Three months ended
                                                          June 30,
                                                     2008          2007
                                               ------------   ------------
Revenues:
  Oil and gas sales                            $  1,898,967   $  1,330,479
  Losses on derivative activities                (1,895,293)             -
                                               ------------   ------------
    Total revenues                                    3,674      1,330,479
Operating expenses:
  Production taxes                                  230,283        161,469
  Lease operating expenses                          623,421        588,233
  Depreciation, depletion and amortization          275,841        331,532
  Accretion expense                                  46,276         45,990
  Exploration expense                                 9,604         41,158
  General and administrative expense              1,048,376      2,539,992
                                               ------------   ------------
    Total operating expenses                      2,233,801      3,708,374
Loss 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         48,323
                                               ------------   ------------
      Total other income (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



Rancher Energy Corp.
Consolidated Balance Sheets
(Unaudited)
                                                  June 30,      March 31,
ASSETS                                              2008           2008
                                                 -----------   -----------
Current Assets:
  Cash and cash equivalents                      $ 5,199,914   $ 6,842,365
  Accounts receivable and prepaid expenses         1,101,987     1,170,641
                                                 -----------   -----------
    Total current assets                           6,301,901     8,013,006
Oil & gas properties at cost (successful
 efforts method):
  Unproved                                        54,051,180    54,058,073
  Proved                                          20,876,225    20,734,143
  Less: Accumulated depletion, depreciation
   and amortization                               (1,757,403)   (1,531,619)
                                                 -----------   -----------
    Net oil & gas properties                      73,170,002    73,260,597
Other assets:
Furniture and equipment, net of accumulated
 depreciation of $251,401 and 204,420,
 respectively                                        937,914       997,196
Other assets                                       1,151,276     1,300,382
                                                 -----------   -----------
Total other assets                                 2,089,190     2,297,578
                                                 -----------   -----------
    Total assets                                 $81,561,093   $83,571,181
                                                 ===========   ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities       $ 1,037,165   $ 2,114,204
  Accrued oil & gas property costs                   250,000       250,000
  Asset retirement obligation                        366,319       337,685
  Note payable, net of unamortized discount
   of $1,452,742 and $2,527,550, respectively     10,787,258     9,712,450
  Derivative liability                             1,939,318       590,480
                                                 -----------   -----------
    Total current liabilities                     14,380,060    13,004,819
Long-term liabilities:
  Derivative liability                               520,802       246,553
  Asset retirement obligation                        944,612       922,166
                                                 -----------   -----------
    Total long-term liabilities                    1,465,414     1,168,719
Stockholders' equity:
  Common stock                                         1,154         1,150
  Additional paid-in capital                      92,008,169    91,790,181
  Accumulated deficit                            (26,293,704)  (22,393,688)
                                                 -----------   -----------
    Total stockholders' equity                    65,715,619    69,397,643
                                                 -----------   -----------
  Total liabilities and stockholders' equity     $81,561,093   $83,571,181
                                                 ===========   ===========