- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-Q

(Mark one)

|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended June 30, 2010

|_| TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from ____________ to _____________

Commission file number 333-145569

PREMIER ENERGY CORP.

(Exact Name of Registrant as specified in its charter)

Florida	20-8724818
(State or other jurisdiction of incorporation organization)	(IRS Employer Identification No.)

14785 Preston Road, Suite 550

Dallas, Texas 75254

(Address of principal executive offices)

(972) 789-5500

(Issuer's telephone number)

Indicate by check mark whether registrant (1) 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 |_|

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicated by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filter and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller 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 |_| No |X|

As of August 23, 2010, there were 212,600,000 shares of the issuer's common stock issued and outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
		Page
Item 1.	Financial Statements.	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	24

Item 4.	Controls and Procedures.	24

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings.	25

Item 1a.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	25

Item 3.	Defaults Upon Senior Securities.	25

Item 4.	Reserved.	25

Item 5.	Other Information.	25

Item 6.	Exhibits.	25

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

PREMIER ENERGY CORP. AND SUBSIDARY

Consolidated Balance Sheets

ASSETS
					June 30, 2010			December 31, 2009
			Note		(unaudited)			(audited)
Current Assets:
		Cash			$	11,604		$	441
		Accounts and notes receivables, net				90,527			92,936
		Inventories		5		113,242			207,532
		Prepaid taxes and expenses		6		415,696			429,695
		Prepaid and other assets		7		20,165			18,204
						651,235			748,808

Property, Plant and Equipment:
		Proven Oil and Gas properties (successful efforts), at cost				7,785,853			8,030,724
		Less- accumulated depletion, depreciation and amortization				(3,860,772	)		(3,848,448	)
		Other property, plant and equipment				98,093			100,702
		Less- accumulated depreciation				(92,052	)		(89,830	)
						3,931,122			4,193,146

Deferred Income tax assets				10		57,889			64,203

TOTAL ASSETS					$	4,640,246		$	5,006,157

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
		Accounts Payable		8	$	1,069,928		$	686,161
		Short term borrowings		9		656,892			522,844
		Short term account payable under out-of-court settlement				84,801			-
		Production taxes payable				445,571			314,460
		Provision for litigations				-			84,872
						2,257,192			1,608,336
	.
Long-Term Liabilities:
		Asset retirement obligations		11		606,059			600,115
						606,059			600,115

TOTAL LIABILITIES						2,863,251			2,208,451

STOCKHOLDERS' EQUITY
		Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none
		issued and outstanding							-
		Common Stock, $0.0001 par value,

		255,000,000 and 250,000,000 shares authorized, 212,600,000 and 210,600,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		12		21,260			21,060
		Additional Paid-in Capital				10,503,677			10,503,677
		Accumulated Deficit				(8,345,812	)		(7,392,870	)
		Accumulated other comprehensive income				(402,130	)		(334,162	)
						1,776,995			2,797,705

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY					$	4,640,246		$	5,006,157

See accompanying notes to unaudited consolidated financial statements.

PREMIER ENERGY CORP. AND SUBSIDARY

Consolidated Statements of Operations

		Three months ended			Three months ended
		June 30, 2010			June 30, 2009
		(unaudited)			(unaudited)


Operating revenues:
	Oil and gas production revenue	$	93,170		$	91,089
Operating expenses:
	Oil and gas production expense		321,961			35,250
	Mineral extraction tax		34,721			40,404
	Depreciation, depletion and amortization		76,346			75,782
	Taxes other that income taxes		13,357			14,687
	Marketing and transportation expenses		82,836			41,512
	General and administrative		80,413			10,825
			609,633			218,460

Operating loss			(516,663	)		(127,371	)

Other Income (Expense):
	Currency translation gain/(loss)		(17,112	)		17,582
	Other income		43,409			-
	Interest expense		(38,838	)		(11,221	)
			(12,542	)		6,361

Loss Before Provision for
	Income Taxes		(529,005	)		(121,010	)


Benefit(Provision) for Income Tax			(19,458	)		(1,927	)


Net Loss		$	(548,463	)	$	(122,937	)




Loss Per Share
	Basic and diluted	$	(0.00	)	$	(0.00	)


Weighted Average Number of Shares Outstanding			212,600,000			210,600,000

See accompanying notes to unaudited consolidated financial statements.

PREMIER ENERGY CORP. AND SUBSIDARY

Consolidated Statements of Operations



	Six months ended			Six months ended
	June 30, 2010			June 30, 2009
	(Unaudited)			(audited)
Operating revenues:

Oil and gas production revenue	$	201,432		$	159,505
Operating expenses:
Oil and gas production expense		610,808			93,087
Mineral extraction tax		59,569			69,567
Depreciation, depletion and amortization		139,607			148,510
Taxes other that income taxes		27,161			28,894
Marketing and transportation expenses		146,163			79,980
General and administrative		149,879			155,071
		1,133,187			575,109

Operating loss		(931,756	)		(415,604	)

Other Income (Expense):
Currency translation gain/(loss)		(8,790	)		(33,739	)
Other Income		43,409			-
Interest expense		(51,489	)		(22,881	)
		(16,870	)		(56,620	)

Loss Before Provision for
Income Taxes		(948,625	)		(472,224	)


Benefit(Provision) for Income Tax		(4,317	)		(23,831	)

Net Loss	$	(952,942	)	$	(496,055	)


Loss Per Share
Basic and diluted	$	(0.00	)	$	(0.00	)

Weighted Average Number of Shares Outstanding		212,600,000			210,600,000

See accompanying notes to unaudited consolidated financial statements.

PREMIER ENERGY CORP. AND SUBSIDIARY

Statement of Stockholders’ Equity

For the period January 1, 2010 through June 30, 2010

(Unaudited)


													Accumulated
								Additional		Accumulated			Other
	Comprehensive					Common		Paid-in		Deficit			Comprehensive
	income/(loss)			Shares		Stock		Capital					Income			Total


Balance at December31, 2009					210,600,000	$	21,060	$	10,503,677	$	(7,392,870	)	$	(334,162	)	$	2,797,705

Common stock issued for legal services					2,000,000		200										200


Net loss for six months ended June 30, 2010	$	(952,942	)								(952,942	)					(952,942	)

Foreign currency translation adjustment		(67,968	)											(67,968	)		(67,968	)
	$	(1,020,910	)



Balance at June 30, 2010					212,600,000	$	21,260	$	10,503,677	$	(8,345,812	)	$	(402,130	)	$	1,776,995

See accompanying notes to unaudited consolidated financial statements.

PREMIER ENERGY CORP. AND SUBSIDIARIES

Statement of Cash Flows

(Unaudited)

	Six months ended			Six months ended
	June 30, 2010			June 30, 2009
Cash Flows from Operating Activities:

Net Loss	$	(952,942	)	$	(495,874	)
Adjustments to reconcile net loss to cash
used in operating activities:
Common stock issued for legal services		200			-
Depreciation, depletion and amortization		139,607			148,541
Interest expense		25,153			22,881
Currency (gain)/loss		8,790			-
Deferred income taxes		4,317			30,540

Changes in Assets and Liabilities:
Accounts Receivable and notes receivable		(498	)		(24,971	)
Inventories		91,417			(12,417	)
Prepaid expenses and taxes		935			36,904
Prepaid and other assets		(2,898	)		(9,711	)
Accounts Payable and accrued expenses		406,020			147,364
Taxes payable		145,946			155,969

Net Cash Used in Operating Activities		(133,953	)		(774	)

Cash Flows used in Investing activities:
Payments to Acquire Oil and Gas properties		-
Payments to Acquire Property, Plant and Equipment		(482	)		-

Net Cash Used in investing Activities		(482	)		-

Cash Flows from Financing Activities:
Proceeds from sale of equity		-
Proceeds from Short-term Borrowings		145,602			18,698
Proceeds from Long-term Borrowings		-

Net Cash Provided from financing Activities		145,602			18,698

Effect of exchange rate changes on cash and cash equivalents		(4	)		(17,662	)

Net increase (decrease) in cash		11,163			262

Cash at beginning of period		441			52

Cash at end of period	$	11,604		$	314

Supplemental Disclosures of Cash Flow information:
Interest paid:	$	-		$	-

Income Taxes paid	$	-		$	2,191

See accompanying notes to unaudited consolidated financial statements.

PREMIER ENERGY CORP.

AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation, Organization and Business Overview

Premier Energy Corp. (“Premier”, and collectively with its subsidiary, the “Company”) was incorporated in the State of Florida on December 26, 2006. The accompanying unaudited condensed consolidated financial statements include the accounts of Premier Energy Corp. and its wholly owned subsidiary, KARBON, CJSC. All significant inter-company balances and transactions have been eliminated in the consolidation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, the accompanying unaudited condensed financial statements include all adjustments, consisting of normal recurring accruals, necessary to present fairly our financial position, results of operations and cash flows. Interim results are not necessarily indicative of the results that may be expected for the entire year. These condensed consolidated financial statements should be read in connection with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

The financial statements included herein as of June 30, 2010, and for the six month periods ended June 30, 2010 and 2009, are unaudited, and in the opinion of management, the information furnished reflects all material adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and of the results for the interim period presented.

On September 25, 2008, the Board of Directors and holder of a majority of our issued and outstanding common stock adopted a resolution changing the name of Premier Nursing Products Corp. to Premier Energy Corp. and in connection therewith on September 25, 2008 filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of Florida. The effective time of the name change was close of business on October 6, 2008. There were no mandatory exchange of stock certificates. Following the name change, the share certificates which reflected our prior name continue to be valid. Certificates reflecting the corporate new name will be issued in due course as old share certificates are tendered for exchange or transfer to our transfer agent in activities raising capital.

On January 30, 2009, the Company entered into a Share Exchange Agreement with Auxerre Trading Ltd., a British Virgin Islands Company (“Auxerre”) pursuant to which the Company acquired 51% of the outstanding securities of Karbon in exchange for 107,406,000 shares of our common stock (the “Karbon Acquisition”). Considering that, following the merger, Auxerre controls the majority of the Company’s outstanding voting common stock and the Company effectively succeeded our otherwise minimal operations to those that are theirs, Karbon is considered the accounting acquirer in this reverse-merger transaction. A reverse-merger transaction is considered, and accounted for as, a capital transaction in substance; it is equivalent to the issuance of Karbon securities for the Company’s net monetary assets, which are deminimus, accompanied by a recapitalization. Accordingly, the Company (Premier) will not recognize any goodwill or other intangible assets in connection with this reverse merger transaction. Karbon is the surviving and continuing entity and the historical financials following the reverse merger transaction are those of Karbon. As a result, of this reverse merger and recapitalization, Karbon’s stockholders’ equity has been restated in terms of Premier’s legal equity for all periods presented in these financial statements. In accordance with Statement of Position 98-5 (“SOP 98-5”), the Company expensed $82,698 representing the excess of liabilities over the assets at January 31, 2009 the date of the transaction as organization costs. All reference to Common Stock shares and per share amounts have been retroactively restated to effect the reverse acquisition as if the transaction had taken place as of the beginning of the earliest period presented.

Premier was a "shell company" (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) immediately prior to our a cquisition of 51% of KARBON pursuant to the terms of the share exchange agreement. As a result of such acquisition, the Company’s operations, in addition to the acquisition, exploration and development, if warranted, of prospective oil and gas properties, will include (i) consulting and working together with KARBON to plan and execute any exploration and development activities they conduct, (ii) reviewing annualized budgets from KARBON, and (iii) approving costs in excess of certain prescribed amounts by KARBON. Consequently, the Company believes that acquisition has caused us to cease to be a shell company as we no longer have nominal operations and also are no longer considered a development stage enterprise as of the effective date of this transaction.

On January 30, 2009, prior to the Karbon Acquisition and the issuance of the 107,406,000, ZRV Consulting, Inc. returned 107,406,000 shares of common stock of Premier for cancellation.

The accompanying consolidated financial statements include the accounts of Premier Energy Corp., and its legal subsidiary KARBON, CJSC after eliminating all intercompany transactions. KARBON, CJSC was organized October 16, 2000 as a Closed Joint Stock Company under the Civil Code of the Russian Federation and carries on its principal activity in the territory of the Russian Federation.

In conjunction with the transaction with Karbon, Premier adopted the December 31 year end of Karbon the operating company and the accounting successor.

The address of principal executive offices of Premier Energy is 14785 Preston Road, Suite 550 Dallas, Texas 75254.

The registered address of the Karbon is 1A Ilekskaya Street, 460034, Orenburg Russia.

The principal activity of the Company is the exploration and production of oil and gas within the Russian Federation.

Note 2 - Summary of significant accounting policies

Business and economic environment

The Russian Federation has been experiencing political and economic change, which has affected and will continue to affect the activities of enterprises operating in this environment. Consequently, operations in the Russian Federation involve risks, which do not typically exist in other markets.

The accompanying financial statements reflect management’s assessment of the impact of the business environment in the country in which the Company operates and the financial position of the Company. The future business environments may differ from management’s assessment.

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 period. Actual results could differ from those estimates. Estimates of oil and gas reserve quantities provide the basis for calculations of depletion, depreciation, and amortization (“DD&A”) and impairment, each of which represents a significant component of the accompanying financial statements.

Revenue

The Company derives revenue primarily from the sale of produced natural gas and crude oil. The Company reports revenue as the gross amount received before taking into account production taxes and transportation costs, which are reported as separate expenses. Revenue is recorded in the month the Company’s production is delivered to the purchaser, but payment is generally received between 30 days after the date of production. No revenue is recognized unless it is determined that title to the product has transferred to a purchaser.

Reporting currency

The Company maintains its accounting records in Russian Roubles. The Company’s functional currency is the Russian Rouble.

The Company’s reporting currency is United States Dollar ($). The balance sheet is translated into US Dollars at a principal rate of exchange. The statement of income is translated at average principal rate of exchange for the appropriate periods.

The principal rate of exchange used for translating foreign currency balances was following:

as of June 30, 2010				$1 = RUB31.20;
as of December 31, 2009				$1 = RUB30.24;

Average principal rate used of exchange income and expenses were following:

for three months period ended June 30, 2010		$1 = RUB30.24;
for three months period ended March 31, 2010		$1 = RUB29.89;
for three months period ended June 30, 2009		$1 = RUB32.21;
for three months period ended March 31, 2009		$1 = RUB33.93;

Resulting translation adjustments are reflected as a separate component of comprehensive income.

The exchange rate fluctuation of the Russian Rouble against the US Dollar may affect the book value of the Company’s assets and liabilities.

Accordingly, the translation of amounts recorded in this currency into US Dollars should not be construed as a representation that such currency amounts have been, could be or will in the future be converted into US Dollars at the exchange rate shown or at any other exchange rate.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Accounts and notes receivable

Accounts and notes receivable are recorded at their transaction amounts less provisions for doubtful debts. Provisions for doubtful debts are recorded to the extent that there is a likelihood that any of the amounts due will not be obtained. As of June 30, 2010 and December 31, 2009 the Company did not have any allowances for uncollectible accounts receivable.

Property, plant and equipment

Fixtures and fittings are stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method over the expected economic life of the asset. Gains and losses on the sale of property, plant and equipment are included in other business income. Costs related to repair and maintenance activities are expensed in the period in which they are incurred and significant renewals and improvements are capitalized.

Vehicles under capital leases are initially recorded at the present value of minimum lease payments. These assets are amortized using the straight-line method over the shorter of lease term or the estimated useful life of the asset.

Expected economic life of the assets is summarized as follows:

Office equipment 5 years

Vehicles 5 years

Useful life and depreciation methods are regularly reviewed in order to ensure the methods and depreciation periods remain appropriate.

Oil and Gas Properties

In accordance with Statement of Financial Accounting Standard ("SFAS") 19, Financial Accounting and Reporting by Oil and Gas Producing Companies, oil and gas properties and the related expenses are recognized under the successful efforts method. This method prescribes that certain exploration costs, including the costs of exploratory dry holes, delay rentals, geological and geophysical costs are charged to expense when incurred.

Exploratory well costs (including costs associated with stratigraphic test wells) are initially capitalized pending determination of whether commercial oil and gas reserves have been discovered by the drilling effort. The length of time necessary for this determination depends on the specific technical or economic difficulties in assessing the recoverability of the reserves. If a determination is made that the well did not encounter oil and gas in economically viable quantities, the well costs are expensed and are reported in "exploration expenses".

Exploratory drilling costs are temporarily capitalized pending determination of whether the well has found proved reserves if both of the following conditions are met:

· 	The well has found a sufficient quantity of reserves to justify, if appropriate, its completion as a producing well, assuming that the required capital expenditure is made; and

· 	Satisfactory progress toward ultimate development of the reserves is being achieved, with the Company making sufficient progress assessing the reserves and the economic and operating viability of the project.

The Company evaluates the progress made on the basis of regular project reviews which take into account the following factors:

· 

First, if additional exploratory drilling or other exploratory activities (such as seismic work or other significant studies) are either underway or firmly planned, the Company deems there to be satisfactory progress. For these purposes, exploratory activities are considered firmly planned only if they are included in the Company’s three-year exploration plan/budget.

· 

In cases where exploratory activity has been completed, the evaluation of satisfactory progress takes into account indicators such as the fact that costs for development studies are incurred in the current period, or that governmental or other third-party authorizations are pending or that the availability of capacity on an existing transport or processing facility awaits confirmation.

Costs, including "internal" costs relating to drilling and equipping of development wells, including development dry holes, as well as costs required for drilling and equipping of injection wells in the process of oil and gas reserves development, are capitalized. These costs are included in oil and gas properties in the balance sheet.

Depreciation, depletion and amortization of capitalized costs of oil and gas properties is calculated using the unit-of-production method based upon proved reserves for the cost of property acquisitions and proved developed reserves for development costs.

Production and related overhead costs are expensed as incurred.

Impairment of long-lived assets

Long-lived assets, including blocks with proved oil and gas reserves, are assessed for potential impairment in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

Oil and gas properties are assessed whenever events or circumstances indicate potential impairment. If the carrying value of oil and gas properties is not recoverable through undiscounted cash flows, impairment is recognized. The impairment is determined on the basis of the estimated fair value of oil and gas properties which, in turn, is measured by discounting future net cash flows. Discounted future cash flows from oil and gas fields are based on the management estimates of future prices that rely on recent actual prices and published prices for forward transactions; such prices are applied to forecast production volumes at particular fields with further discounting for the expected risk level.

Forecast production volumes shall be understood as reserves, including probable reserves that are proposed to be extracted using a known amount of capital expenditures. Production volumes and prices correspond to the internal plans and forecasts, as well as other data in the published financial statements. Assumptions regarding future prices and costs used to assess oil and gas properties for impairment differ from those used in the Standardized measure of proved oil and gas reserves. During the years ended December 31, 2009, 2008 and 2007, no property impairments were recorded.

Grouping of assets for the purpose of impairment is performed on the basis of the lowest level of identifiable cash flows that are largely independent of the cash flows from other groups of assets – as a rule, for oil and gas properties such level is represented by the field. Long-lived assets intended by management for use during a period not exceeding one year are recorded at the lower of depreciated value or fair value, less selling expenses.

Acquisition costs of unproved oil and gas properties are assessed for impairment on a regular basis and any estimated impairment is charged to expense.

Asset retirement obligations

The Company has asset retirement obligations associated with its core business activities. The nature of the assets and potential obligations are as follows:

Exploration and Production – The Company’s exploration, development and production activities involve the use of the following assets: wells, related equipment, operating site and in-field pipeline.

Generally, licenses and other regulatory acts require that such assets be decommissioned upon the completion of production. According to these requirements, the Company is obliged to decommission wells, dismantle equipment, restore the sites and perform other related activities. The Company’s estimates of these obligations are based on current regulatory or license requirements, as well as actual dismantling and other related costs. Asset retirement obligations are calculated in accordance with the provisions of SFAS 143, Accounting for Asset Retirement Obligations.

Deferred tax

Deferred tax assets and liabilities are measured using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognized to the extent it is more likely than not that future taxable profit will be available against which the temporary differences can be applied. Deferred tax is calculated using the tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and that are expected to apply when the deferred tax asset concerned is realized or the deferred tax liability is settled.

Interest-bearing borrowings

The Company’s financial instruments including cash and cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates fair value due to the short-term maturity of these instruments. The recorded value of the Company’s credit facility approximates its fair value as it bears interest at a floating rate.

The Company had $656,892 in loans outstanding under its credit agreements as of June 30, 2010 and $522,844 in loans outstanding under its credit agreements as of December 31, 2009.

Contingencies

Certain conditions may exist as of the balance sheet date, which may result in losses to the Company but the impact of which will only be resolved when one or more future events occur or fail to occur.

If a Company’s assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability is accrued and charged to the statement of income. If the assessment indicates that a potentially material loss is not probable, but is reasonably possible, or is probable, but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, is disclosed in the notes to the financial statements. Loss contingencies considered remote or related to unasserted claims are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee is disclosed.

Income Taxes

Starting on January 1, 2009, the combined statutory tax is 20% (Federal and city income tax rates that total 2.0% and a regional income tax rate that varies from 13.5% to 18.0%.

The U.S. Parent has had only losses from inception and has established a reserve equal to 100% of any benefit for Net Operating Loss Carryforwards.

Stock-based Compensation

In April 2010, 2,000,000 shares of common stock were issued to a legal advisor for services to be rendered from April 2010 through December 2010.

The Company records stock-based compensation in accordance with ASC 718 (formerly SFAS No. 123R "Share Based Payments"), using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.

Loss per Share

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by Financial Accounting Standards No. 128, "Earnings per Share." As of June 30, 2010 and 2009, there we no common share equivalents outstanding.

Business Segments

The Company operates in one segment and therefore segment information is not presented

Fair Value of Assets and Liabilities

Effective June 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), which provides a framework for measuring fair value under GAAP. SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 157 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. SFAS 157 also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.

There are three general valuation techniques that may be used to measure fair value, as described below:

A)	Market approach – Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

B)	Cost approach – Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

Income approach – Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.

Financial assets and liabilities are valued using either level 1 inputs based on unadjusted quoted market prices within active markets or using level 2 inputs based primarily on quoted prices for similar assets or liabilities in active or inactive markets. For certain long-term debt, fair value is based on present value techniques using inputs derived principally or corroborated from market data. Using level 3 inputs using management’s assumptions about the assumptions market participants would utilize in pricing the asset or liability. In the Company’s case this entailed assumptions used in pricing models for attached warrant calculations. Valuation techniques utilized to determine fair value are consistently applied.

The Company’s short-term debt is the only item that is subject to SFAS 157 in the amounts of $656,892 and $522,844 at June 30, 2010 and December 31, 2009, respectively.

Recent accounting pronouncements

The company has evaluated all the recent accounting pronouncements through August 23, 2010 and believes that none of them will have a material effect on the company's financial statements.

Note 3 - Going concern

These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 2010, the Company had not yet achieved profitable operations giving rise to substantial doubt as to the Company’s ability to continue as a going concern.

The Company's ability to continue as a going concern is dependent upon:

(i) raising additional capital to fund operations and to complete the recapitalization,

(ii) the further development of the North-Kopanskoye oilfield and,

(iii) ultimately, the achievement of profitable operations.

Management is currently contemplating several additional financing sources to fund operations until profitability can be achieved. However, there can be no assurance that additional financing can be obtained on conditions considered by management to be reasonable and appropriate, if at all. The financial statements do not include any adjustments that might arise as a result of this uncertainty.

Note 4 - Concentration of credit risk

Substantially all of the Company's receivables are within the oil and gas industry, primarily from purchasers of oil and gas. Although diversified among many companies, collectability is dependent upon the financial wherewithal of each individual company as well as the general economic conditions of the industry. The receivables are not collateralized. To date the Company has had minimal bad debts.

During the three months period ended June 30, 2010, sales to two unrelated customers represented 65% and 35% of total revenue (during the three months period ended June 30, 2009 sales to one unrelated customers represented 100 % of total revenue).

During the six months period ended June 30, 2010, sales to two unrelated customers represented 51% and 49% of total revenue (during the s months period ended June 30, 2009 sales to three unrelated customers represented 74 %, 25% and 1% of total revenue).

Note 5 - Inventories.

Inventories are summarized as follows:

	As of June 30, 2010 (unaudited)		As of December 31, 2009

Inventories of crude oil (less valuation allowance $114,756 and $98,631 as of June 30, 2010 and December 31, 2009, respectively)	$	18,823	$	110,255
Raw materials		94,920		97,277
	$	113,242	$	207,532

Note 6 - Prepaid taxes and expenses.

Prepaid taxes and expenses include:

	As of June 30, 2010 (unaudited)		As of December 31, 2009

VAT receivable	$	407,428	$	418,428
Current Income Tax Receivables		3,878		4,000
Other taxes receivable		4,127		6,917
Deferred expenses		263		450
	$	415,696	$	429,695

Note 7 - Prepaid and other assets.

Prepaid and other assets comprise:

	As of June 30, 2010 (unaudited)		As of December 31, 2009

Prepayments		18,857		18,204
Loans to related parties		-		-
Advances to Employees		1,308		-
	$	20,165	$	18,204

Note 8 - Accounts payable

Accounts payable are summarized as follows:

	As of June 30, 2010 (unaudited)		As of December 31, 2009

Trade accounts payable	$	816,022	$	502,530
Wages and salaries payable		228,066		135,423
Interest payable		25,315		-
Other accounts payable		309		48,208
	$	1,069,928	$	686,161

Note 9 - Borrowings

The Company borrows operating funds under several loans agreements with non-financial institutions:

	As of June 30, 2010 (unaudited)		As of December 31, 2009

Interest free, unsecured loans from RossGas, LLC a related party (debt is repayable on mutual consent)	$	141,944	$	118,667
Interest free, unsecured loans from Vlasov N.V. a related party (debt is repayable on mutual consent)		83,743		84,314
Interest free, unsecured loans from Galazov A.A. a related party (debt is repayable on mutual consent)		133,158		102,830
8%, Unsecured loans from Auxerre trading Ltd. a related party (debt is repayable on March 2, 2011)		100,000		-
Interest free, unsecured loans from ZRV Consulting, Inc. a related party (debt is repayable on mutual consent)		-		2,350
Interest free, unsecured loan from Tintrade Limited		200,000		200,000
Interest free, unsecured loans from members of staff		48		14,683
	$	656,892	$	522,844

Note 10 - Deferred tax assets and liabilities

Deferred tax assets and liabilities are composed of the following items:

	GROSS ASSETS				GROSS LIABILITIES						NET ASSETS
	As of June 30, 2010 (unaudited)		As of December 31, 2009		As of June 30, 2010 (unaudited)			As of December 31, 2009			As of June 30, 2010 (unaudited)			As of December 31, 2009

Property, plant and equipment	$	427	$	441	$			$	-		$	427		$	441
Proved Oil and Gas properties		1,106		15,013					-			1,106			15,013
Inventories		22,950		19,726					-			22,950			19,726
Accounts payable		1,212		1,250					-			1,212			1,250
Assets retirement obligations		41,072		37,363					-			41,072			37,363
Prepaid and other assets		420		-								420			-
Borrowings		-		-		(9,298	)		(9,590	)		(9,298	)		(9,590	)
Deferred tax assets/(liabilities)	$	67,187	$	73,793	$	(9,298	)	$	(9,590	)	$	57,889		$	64,203

Temporary differences between these financial statements and tax records gave rise to deferred income tax assets and liabilities as of June 30, 2010 and December 31, 2009 as above.

Note 11 – Assets retirement obligations

	As of June 30, 2010 (unaudited)			As of December 31, 2009

Beginning asset retirement obligation	$	600,115		$	566,279
Liabilities incurred		-			-
Liabilities settled		-			-
Accretion expense		25,153			13,944
Revision to estimated cash flows		-			-
Foreign currency translation		(19,209	)		22,962	)
Ending asset retirement obligation	$	606,059		$	600,115

The asset retirement obligations represent the estimated future costs associated with the plugging and abandonment of oil and gas wells, removal of equipment and facilities from owned and leased acreage, and land restoration.

Note 12 - Stockholders' Equity

All descriptions and transactions that affect stockholders’ equity are in terms of Premier (See Note 1).

On May 30, 2008, the Company increased its number of Authorized Common Shares from 100,000,000 (One Hundred Million Common Shares) to 250,000,000 (Two Hundred and Fifty Million Common Shares) and the Par Value changed from ($.001) to ($.0001). The Aggregate par value of the Common Shares changed from ($10,000) to ($25,000) and the Aggregate par value of the Preferred changed from ($10,000) to ($1,000). The number of authorized preferred shares remained at 10,000,000.

On July 28, 2008 the Corporation's Board of Directors and the holder of a majority of its issued and outstanding common stock adopted resolutions approving an eighteen for one (18:1) forward stock split of the Corporation's issued and outstanding common stock, par value $0.0001 per share. The split became effective August 8, 2008. All prior amounts have been adjusted retroactive for the stock split.

On September 5, 2008, the Company and its principal shareholder and executive officer, entered into an agreement with ZRV Consulting Inc. pursuant to which ZRV acquired 162,000,000 shares of Premier for a cash consideration of $300,000. The transaction was completed on September 5, 2008. As a result of this transaction, there were 210,600,000 outstanding common shares of which Auxerre Trading Ltd. owned 107,406,000 common shares or approximately 51% of the outstanding common shares.

On April 16, 2010, the Company filed a Form S8 Registration Statement (File No. 333-166113) registering 5,000,000 shares of common stock issuable under its 2010 Incentive Stock Plan In April 2010, 2,000,000 shares of common stock were issued to a legal advisor for services to be rendered from April 2010 through December 2010.

Note 13 - Operating lease

The following is a schedule by years of future minimum rental payments required under operating lease that have initial or remaining noncancelable lease terms in excess of one year as of June 30, 2009:

US Dollars

Year ended December 31, 2010 (remaining six months)	$	30,600
Year ended December 31, 2011		-
	$	30,600

The Company rents office space and the monthly rental as at June, 2010 was $ 2,491. The Monthly Rental is paid on or before the first day of each month. The Tenancy Agreement expires in December 2010. The Company has the exclusive right to extend the term of the Tenancy whereas the Owner has the right to revise the Monthly Rental.

Further, the company rents 3 plots of land and the monthly rental as at December 31, 2009 was $2,609. The Monthly Rental is paid on or before the first day of each month. The Land Lease Agreement expires in December 2010. The Company has the exclusive right to extend the term of the Lease through to December 2014 whereas the Owner has the right to revise the Monthly Rental.

Note 14 - Related party transactions

In the six months period ended June 30, 2010, related parties lent to and paid for expenses on behalf of the Company. The related parties are entities owned by a major shareholder of Premier Energy Corp. In the six months period ended June 30, 2009 the Company also entered into similar transactions with related parties.

Annual and six months periods’ balances with related parties are set out below:

	As of June 30, 2010 (unaudited)		As of December 31, 2009
Receivable from related parties:
Receivable from companies under common control and key members of staff, non-interest bearing loans	$	1,308	$	-
Total receivable from related parties	$	1,308	$	-
Payable to related parties:
Payable to companies under common control, trade	$	128,945	$	133,001
Payable to companies under common control, non interest bearing		356,969		322,844
Payable to companies under common control, 8% interest bearing		100,000		-
Total payable to related parties	$	585,915	$	455,845

Note 15 - Commitments, contingencies and operating risks

Capital expenditure, exploration and investment programs

The entity owns and operates the asset (natural gas and crude oil reserves located in the North Kopanskoye Field) under which it has commitments for capital expenditure in relation to its exploration programs. It relates to an existing license agreement in the Russian Federation.

Development plan calls for the implementing of pressure maintenance by water flooding both the Artinsky-1 and Bashkirian A4 Central oil reservoirs. A combination of procedures and injectors totaling 18 wells in Artinsky-1 reservoir and 9 wells in the Bashkirian A4 Central reservoir are scheduled to be active when the water flood development plant are fully implemented. Additionally, two wells are scheduled to be completed in the Bashkirian A4 South reservoir, which will be produced by primary depletion.

The capital commitments to undertake the drilling and oilfield construction activities envisaged by the North Kopanskoye Field exploration and development plan, were assessed and estimated by the management to be in the region of $70,000,000 to $73,000,000. Unless the Company is able to raise sufficient capital, the Company will not be able to meet its license obligations and may not be able to continue as a going concern. If the Company fails to retain its license, it may lose its ability to operate in the Russian Federation.

Russian Business Environment

While there have been improvements in the Russian economic situation, such as an increase in gross domestic product and a reduced rate of inflation, Russia continues economic reforms and development of its legal, tax and regulatory frameworks as required by a market economy. The future stability of the Russian economy is largely dependent upon these reforms and developments and the effectiveness of economic, financial and monetary measures undertaken by the government. In addition, laws and regulations, including interpretations, enforcement and judicial processes, continue to evolve in Russia. Other laws and regulations and certain other restrictions have a significant effect on the Company's industry, including, but not limited to the following issues: rights to use subsurface resources, environmental matters, site restoration, transportation and export, corporate governance, taxation, etc.

Political environment

Trading activity and the profit derived there from may be affected by political, statutory, financial and administrative changes, including the changes in environment protection legislation that are currently underway in Russia.

Insurance

During the normal course of business disputes and claims may arise and there can be uncertainties surrounding the ultimate resolution of these matters.

Taxation

The taxation system in the Russian Federation is relatively new and is characterized by frequent changes in legislation, official pronouncements and court decisions, which are often unclear, contradictory and subject to varying interpretation by different tax authorities. Taxes are subject to review and investigation by a number of authorities, which have the authority to impose severe fines, penalties and interest charges. A tax year remains open for review by the tax authorities during the three subsequent calendar years.

Russian transfer pricing rules were introduced in 1999, giving Russian tax authorities the right to make transfer pricing adjustments and impose additional tax liabilities in respect of all “controlled” transactions, provided that the transaction price deviates from the market price by more than 20%. Controlled transactions include transactions between related entities and certain other types of transactions between independent parties, such as foreign trade transactions with significant (by more than 20%) price fluctuations.

The Russian transfer pricing rules are vaguely drafted, leaving wide scope for interpretation by Russian tax authorities and courts. Due to the uncertainties in interpretation of transfer pricing legislation, the tax authorities may challenge the Company’s prices and propose an adjustment. If such price adjustments are upheld by the Russian courts and implemented, the Company’s future financial results could be adversely affected. In addition, the Company could face significant losses associated with the assessment of prior tax underpaid and related interest and penalties, which could have an adverse effect on the Company’s financial condition and results of operations. The Company’s management believes that such transfer pricing related tax contingencies are remote and therefore may not have any significant impact on the Company’s financial statements.

Environmental liabilities

Potential liabilities that may arise as a result of changes in laws and regulations and settlement of the civil disputes can not be reliably assessed but they may prove to be material. Under existing legislation, management believes that there are no significant unrecorded liabilities which could have a significant adverse effect on the operating results or financial position of the Company.

Environmental protection

Environmental protection liabilities are carried in accounts when they arise and can be reliably measured and when there are probabilities of arising of such liabilities.

Pension Benefits

The Company makes payments to State Pension Fund of Russian Federation. These payments are calculated by the employer as a percentage of salary expense and are expensed as they are incurred.

Employment Agreement

On October 16, 2008, the Company entered into an employment agreement with Dr. Prodanovic. Under the terms of the 24 month agreement, he will serve as Chief Executive Officer. In addition, during the term of the agreement we agreed to cause him to be successively nominated for election to the Board of Directors. As compensation, the Company agreed to pay Dr. Prodanovic an annual base salary of $100,000, which such base is subject to annual merit review and increase as deemed appropriate by the Board, together with bonus compensation in amounts as may be determined by the Board. The Company has agreed to issue Dr. Prodanovic options to purchase 200,000 of our common stock. As of June 30, 2009 the Options have not be granted and the Company is currently negotiating the terms. He is also entitled to participate in such benefit packages as we provide to similarly situated employees, four weeks paid vacation and 10 paid holidays. The agreement contains customary provisions related to non-compete, confidentiality, non-solicitation and invention assignment. As of June 30, 2010 the Company recorded accrued salary of $133,333.

The agreement may be terminated by us for cause as set forth in the agreement, by us without cause, or by Dr. Prodanovic under certain circumstances. If we terminate the agreement for cause, he is not entitled to any severance benefits. If we should terminate the agreement without cause, we are obligated to pay Dr. Prodanovic an amount equal to his monthly base salary for the greater of 24 months or until he is hired in a new position which is consistent with his experience and stature. If such new position pays less than his then current base salary we are obligated to pay the difference for the balance of the 24 month severance period. If his employment in the new position should terminate prior to the expiration of the 24 month severance period, we are obligated to pay his monthly base salary during the remaining period. In the event we should fail to appoint Dr. Prodanovic Chief Executive Officer and a member of our Board of Directors in any successive periods during the term of the agreement, should we fail to compensate him pursuant to the terms of the agreement, or if there is a material breach of the agreement, Dr. Prodanovic is entitled to terminate the agreement and we shall be obligated to pay him the same severance benefits had we terminated the agreement without cause

On February 27, 2009, the Company entered into an employment agreement with Alexey Goleshev. Under the terms of the agreement, Alexey serves as Chief Financial Officer and a director. As of June 30, 2010 the Company recorded accrued salary of $25,000.

On February 27, 2009, the Company entered into an employment agreement with Bosko Popovic. Under the terms of the agreement, Bosko serves as Chief Operating Officer and a director. As of June 30, 2010 the Company recorded accrued salary of $25,000.

On February 27, 2009, the Company entered into an employment agreement with Aslanbi Kodzokov. Under the terms of the agreement, Aslanbi serves as Secretary and a director. As of June 30, 2010 the Company recorded accrued salary of $25,000.

Note 16 - Subsequent events

None.

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

Forward-looking Information

This quarterly report contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These statements relate to future events or to our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. There are a number of factors that could cause our actual results to differ materially from those indicated by such forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Moreover, we do not assume responsibility for the accuracy and completeness of such forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this report to conform such statements to actual results.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand Premier Energy Corp., our operations, and our present business environment. This MD&A should be read in conjunction with “Item 1. Financial Statements” of this report on Form 10-Q.

This overview summarizes the MD&A, which includes the following sections:

•

Executive Summary – an executive summary of our results of operations for the three-month period and six-month period ended June 30, 2010.

•

Critical Accounting Estimates – a discussion of the accounting estimates that are most critical to aid in fully understanding and evaluating our reported financial results and that require management’s most difficult, subjective or complex judgments.

•

New Accounting Standards – a discussion of recently issued accounting standards and their potential impact on our consolidated financial statements.

•

Results of Operations – an analysis of the Company’s unaudited condensed consolidated results of operations for each of the three months and six months ended June 30, 2010 and 2009, which have been presented in its unaudited condensed consolidated financial statements. In order to assist the reader in understanding our business as a whole, certain metrics are presented for each of our segments.

•

Liquidity and Capital Resources – an analysis of cash flows, off-balance sheet arrangements, stock repurchases and the impact of changes in interest rates on our business.

RESULTS OF OPERATIONS

The following discussion and analysis summarizes the results of operations of the Company for the six-month periods ended June 30, 2010 and 2009.

COMPARISON OF THREE MONTHS ENDED JUNE 30, 2010 AND 2009

EXECUTIVE SUMMARY

The following is an executive summary of what the Company believes are important results as of and during the three months ended June 30, 2010, which should be considered in the context of the additional discussions herein and in conjunction with its unaudited condensed consolidated financial statements. We believe such highlights are as follows:

•

Net revenues for the three months ended June 30, 2010 increased 2% to $0.093 million from $0.091 million in the comparable period in 2009.

•

Gross profit margin decreased 1,769.1% points for the three months ended June 30, 2010 to (282.8)% from 16.9% in the comparable period in 2009, primarily resulting from increased oil and gas production expenses.

•

General and administrative expenses as a percentage of revenue were 86.3% and 11.9% for the three months ended June 30, 2010 and 2009, respectively, which was primarily due to, among other factors, additional legal, consulting and audit expenses.

•

Marketing and transportation expenses were up by 44%, increasing from $0.08 million for the three month period ended June 30, 2009 to $0.12 million by June 30, 2010.

COMPARISON OF SIX MONTHS ENDED JUNE 30, 2009 AND 2008

EXECUTIVE SUMMARY

The following is an executive summary of what the Company believes are important results as of and during the six months ended June 30, 2010, which should be considered in the context of the additional discussions herein and in conjunction with its unaudited condensed consolidated financial statements. We believe such highlights are as follows:

•

Net revenues for the six months ended June 30, 2010 increased 26% to $0.20 million from $0.16 million in the comparable period in 2009.

•

Gross profit margin decreased 11,692.2% points for the six months ended June 30, 2010 to (232.81)% from (1.97)% in the comparable period in 2009, primarily resulting from increased oil and gas production expenses.

•

General and administrative expenses as a percentage of revenue were 74.4% and 97.2% for the six months ended June 30, 2010 and 2009, respectively, which was primarily due to increase in oil and gas production revenue.

•

Marketing and transportation expenses were up 38%, value increasing from $0.15 million for the six month period ended June, 2009 to $0.21million by June 30, 2010.

CRITICAL ACCOUNTING ESTIMATES

Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amount of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, estimates, assumptions and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note Summary of Significant Accounting Policies , of the Notes to Unaudited Condensed Consolidated Financial Statements included in Item 1. Financial Statements.

NEW ACCOUNTING STANDARDS

The company has evaluated all the recent accounting pronouncements through August 23, 2010 and believes that none of them will have a material effect on the company's financial statements.

RESULTS OF OPERATIONS

Three Months Ended June, 2010 and2009

The following summarizes our operational highlights during three months ended June 30, 2010:

The Company’s oil operations consist of its development and production efforts in the Russian Federation. The following table sets forth its domestic oil operating results for three months ended June 30, 2010 and June 30, 2009 (in US Dollars):

	For three months ended June 30,
	2010		2009

Oil revenue	$	93,170	$	91,089

Net Oil sold (Bbls)		3,684		4,377
Average price of oil sold (per bbl)	$	25.29	$	20.81
Average production and transportation cost (per bbl)	$	119.31	$	26.77

During three months ended June 30, 2010, the Company’s domestic oil revenues were up 2.3%, due to oil production decreased by 39.5% and selling price increased of by 23.1%.

The Company’s domestic oil operating expenses increased 355.6%, value increasing from $0.22 million at the prior the three month period ended June 30, 2009 to $0.61 million by June 30, 2010. The increase in marketing and transportation expenses, general and administrative expenses and oil and gas production expense is the primary reason for the overall increase in the operating expenses. Increasing oilfield costs due to necessary workover activity of well No. 130 and the decreased level of production during the period of three months ended June 30, 2010 resulted in higher costs per bbl.

Six Months Ended June, 2010 and 2009

The following summarizes our operational highlights during six months ended June 30, 2010:

The Company’s oil operations consist of its development and production efforts in the Russian Federation. The following table sets forth its domestic oil operating results for six months ended June 30, 2010 and June 30, 2009 (in US Dollars):

	For six months ended June 30,
	2010		2009

Oil revenue	$	201,432	$	159,505

Net Oil sold (Bbls)		8,771		11,324
Average price of oil sold (per bbl)	$	22.97	$	14.09
Average production and transportation cost (per bbl)	$	93.10	$	21.43

During six months ended June 30, 2010, the Company’s domestic oil revenues were up by 26%, due to decreased oil production by 50% and increase of selling price by 65%.

The Company’s domestic oil operating expenses decreased 44.5%, value falling from $0.584 million at the prior the six month period ended June 30, 2009 to $1.13 million by June 30, 2010. The increased marketing and transportation expenses and oil and gas production expense are the primary reason for the overall increase in the operating expenses. Increasing oilfield costs due to workover activity of well No. 130 and the decreased level of production during the period of six months ended June 30, 2010 resulted in higher costs per bbl.

The exploration for, and the acquisition, development, production, and sale of, natural gas and crude oil is highly competitive and capital intensive. As in any commodity business, the market price of the commodity produced and the costs associated with finding, acquiring, extracting, and financing the operation are critical to profitability and long-term value creation for stockholders. Generating reserve and production growth while containing costs represents an ongoing focus for management and is made particularly important in our business by the natural production and reserve decline associated with oil and gas properties. In addition to developing new reserves, we compete to acquire additional reserves, which involve judgments regarding recoverable reserves, future oil and gas prices, operating costs and potential environmental and other liabilities, title issues and other factors.

Since June 30, 2010, there have been no significant material developments.

Results of Operations achieved during three months ended June 30, 2010 compared to three months ended June 30, 2009

We generate all of our revenues in Russian Rubles (RUR). Our revenues have been affected by fluctuations in foreign currency exchange rates.

Records of our Proven Oil and Gas Properties as well as other Property, Plant and Equipment have been also affected by fluctuations in foreign currency exchange rates in the US GAAP accounts.

We had net loss from continuing operations for the three months ended June 30, 2010 of $0.55 million compared to a net loss of $0.12 million for the same period in 2009. Factors contributing to the $0.43 million increase in net loss from three months ended June 30, 2009 to three months ended June 30, 2010 included the following:

·	Oil production net of our interest for three months ended June 30, 2010 was 2,822 Bbls resulting in $93,170 worth of oil sales, at an average wellhead price of $25.29 per Bbls for the three months ended June 30, 2010.

·	In 2009, our net production was 4,677 Bbls resulting in $91,089 worth of oil sales, at an average wellhead price of $20.81.

·	The 39.5% decrease in production volumes resulted from abandonment of oil production by Wells 108, 130 and 133 due to operating necessity of work over activities.

·	The 813.4% increase in oil production expenses was primary due to workover activity necessary for well No. 130.

Our marketing and transportation expenses and production taxes (mineral extraction tax) for three months ended June 30, 2010 increased to $117,557 (44% over three months ended June 30, 2009).

General and administrative expenses increased from $10,825 for the three months ended June 30, 2009 to $80,413 for the three months ended June 30, 2010, due largely to:

·	Increase in salary of officers, audit, legal, advisory and accounting expense due to the Premier Energy Corp. appointed lawyers, auditors and advisers charging additional professional fees associated to compliance with SEC reporting rules and requirements.

Results of Operations achieved during six months ended June 30, 2010 Compared to six months ended June 30, 2009

We generate all of our revenues in Russian Rubles (RUR). Our revenues have been affected by fluctuations in foreign currency exchange rates.

Records of our Proven Oil and Gas Properties as well as other Property, Plant and Equipment have been also affected by fluctuations in foreign currency exchange rates in the US GAAP accounts.

We had net loss from continuing operations for the six months ended June 30, 2010 of $0.95 million compared to a net loss of $0.50 million for the same period in 2009. Factors contributing to the $0.45 million increase in net loss from six months ended June 30, 2009 to six months ended June 30, 2010 included the following:

·	Oil production net of our interest for six months ended June 30, 2010 was 4,861 Bbls resulting in $201,432 worth of oil sales, at an average wellhead price of $22.97 per Bbls for the six months ended June 30, 2010.

·	In 2009, our net production was 9,866 Bbls resulting in $159,505 worth of oil sales, at an average wellhead price of $14.09.

·	The 50.7% decrease in production volumes resulted from abandonment of oil production from Wells 108, 130 and 133 due to operating necessity of work over activities.

·	The 556.2% increase in oil production expenses was primary due to workover activity necessary for well No. 130.

Our marketing and transportation expenses and production taxes (mineral extraction tax) for six months ended June 30, 2010 increased to $205,372 (38% over the six months period ended June 30, 2009).

General and administrative expenses for the six months ended June 30, 2010 decreased to $149,879 (3% lower then for the six months period ended June 30, 2009).

LIQUIDITY AND CAPITAL RESOURCES

We have historically met our capital requirements through the issuance of common stock, obtaining contributions of Additional Paid-In Capital from parent and by borrowings. In the future, we anticipate we will be able to provide the necessary liquidity by the revenues generated from the sales of crude oil due to increased production, however, if we do not generate sufficient sales revenues we will continue to finance our operations through equity and/or debt financings.

As the most expeditious way to quickly increase production output, Karbon CJSC has commenced a program of repairs and modernization of the existing wells in the North-Kopanskoye Oilfield in accordance with the approved schedule for work-over of the shut-in oil wells. The exploration wells drilled in 1980s, and subsequently completed and produced, have been shut-in in the meantime due to needed repairs. The current plans call for routine re-work on two shut-in wells by June and full work-over on additional three shut-in wells by March 2011. The aim is to increase production rate in this year from the present 55 bopd to the expected 250 bopd from the existing wells. Local Russian contractor, ARTE, specializing in oil well work-over and modernization, has mobilized the equipment needed and started work at the North-Kopanskoye Oilfield.

Subject to completion of $10,000,000 funding, the current plans also call for other concurrent work in 2010 at the North-Kopanskoye Oilfield, including drilling and completion of two new horizontal production wells by the international drilling company KCA Deutag. Produced oil is presently trucked away after being sold at the wellhead at field-posted prices. With the planned increases in oil production output, the intent is to switch from trucking to more efficient and economic oil export via the adjacent GazpromNeft pipeline system, provided the demand for crude keeps as expected. All needed infrastructure already exists for pipeline export.

Satisfaction of Our Cash Obligations for the Next 12 Months

Unless we receive an imminent infusion of cash either through the sale of equity or debt, we will not be adequately capitalized. There is no guarantee that we will be able to obtain funding or if we do obtain funding that will be on adequate terms to meet our drilling commitments and expected general and administrative expenses for the next twelve months. Further, the capital commitments to undertake the drilling and oilfield construction activities envisaged by the North Kopanskoye Field exploration and development plan, were assessed and estimated by the management to be in the region of $70,000,000 to $73,000,000. Unless the Company is able to raise sufficient capital, the Company will not be able to meet its license obligations and may not be able to continue as a going concern. If the Company fails to retain its license, it may lose its ability to operate in the Russian Federation.

Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of operations, particularly companies in the oil and gas exploration industry. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, maintain our business license within the Russian Federation and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Off-Balance Sheet Arrangements

We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships. Such entities are often referred to as structured finance or special purpose entities (“SPEs”) or variable interest entities (“VIEs”). SPEs and VIEs can be established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. We were not involved in any unconsolidated SPEs or VIEs at any time during any of the periods presented in this Form 10Q.

From time to time, we enter into contracts that might be construed as off-balance sheet obligations but are normal in the day-to-day course of business in the oil and gas industry. Those contracts could include the contracts discussed directly above under Contractual Obligations. We do not believe we will be affected by these contracts materially differently than other similar companies in the energy industry.

Cash Flows and Capital Expenditures

Our capital budget for 2010 is currently estimated at $10 million for the planned work-over of five existing wells and drilling of two new horizontal wells in the North Kopanskoye Field and for the oil field construction of surface facilities. Our planned 2010 development and exploration expenses could increase if any of the operations associated with our properties experience cost overruns.

Contractual Obligations

Presently we have no Company hedging policy in place. Collared hedges have the effect of providing a protective floor while allowing us to share in upward pricing movements to a fixed point. Consequently, while these hedges are designed to decrease our exposure to price decreases, they also have the effect of limiting the benefit of price increases beyond the ceiling. As we need, we may pursue hedging to protect a portion of our production against future pricing fluctuations, or enter into derivative contracts to decrease exposure to commodity price volatility.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company” as defined by Regulation S-K, the Company is not required to provide information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, under the supervision of and with the participation of the Company’s principal executive officer and principal financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2010.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2010, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become a party to litigation or other legal proceedings that it considers to be a part of the ordinary course of its business. The Company is not involved currently in legal proceedings that could reasonably be expected to have a material adverse effect on its business, prospects, financial condition or results of operations. The Company may become involved in material legal proceedings in the future.

Item 1(A). Risk Factors

As a “Smaller Reporting Company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this item.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Reserved

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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.

	PREMIER ENERGY CORP.

Dated: August 23, 2010	By:	/s/ Anton Prodonavic
		Anton Prodonavic, Chief Executive Officer and Director (Principal Executive Officer)