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 September 30, 2009


OR


|_|
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)
789-5151


(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. Yesx   No  o





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).


Yesx   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 filero
            Accelerated
      fileroNon-accelerated
      filer      o
            Smaller
      reporting companyx





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act)       Yeso   No  x





As of
November 23, 2009, there were 210,600,000 shares of the issuer's common stock
issued and outstanding.
















TABLE
OF CONTENTS





PART
      I - FINANCIAL
      INFORMATIONPageItem
      1.
            Financial
      Statements.
            3Item
      2.
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations.
            21Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk.
            26Item
      4.
            Controls
      and Procedures.
            26PART
      II -  OTHER INFORMATIONItem
      1.
            Legal
      Proceedings.
            27Item
      1a.
            Risk
      Factors
            27Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds.
            27Item
      3.
            Defaults
      Upon Senior Securities.
            27Item
      4.
            Submission
      of Matters to a Vote of Security Holders.
            27Item
      5.
            Other
      Information.
            27Item
      6.
            Exhibits.
            27








2








PART
I - FINANCIAL INFORMATION





Item
1. Financial Statements.





PREMIER
ENERGY CORP. AND SUBSIDARY





Condensed
Consolidated Balance Sheets





PREMIER
ENERGY CORP. AND SUBSIDARY Consolidated
Balance Sheets




ASSETSSeptember
      30, 2009
              
              
              December
      31,Note
              
              
              (unaudited)
              
              
              2008Current
      Assets:Cash
              
              
              
              
              $
              280
              
              
              $
              52Accounts
      and notes receivables, net
              
              
              
              
              
              125,476
              
              
              
              85,369Inventories
              
              
              5
              
              
              
              128,665
              
              
              
              121,171Prepaid
      taxes and expenses
              
              
              6
              
              
              
              432,846
              
              
              
              451,765Prepaid
      and other assets
              
              
              7
              
              
              
              50,092
              
              
              
              13,323737,359
              
              
              
              671,680Property,
      Plant and Equipment:Proven
      Oil and Gas properties (successful efforts), at cost
              
              
              
              
              
              
              8,071,288
              
              
              
              8,266,831Less-
      accumulated depletion, depreciation and amortization
              
              
              
              (3,747,105
              )
              
              
              (3,594,193
              )Other
      property, plant and equipment
              
              
              
              
              
              
              100,537
              
              
              
              102,396Less-
      accumulated depreciation
              
              
              
              
              
              
              (87,736
              )
              
              
              (82,169
              )4,336,984
              
              
              
              4,692,865Deferred
      Income tax assets
              
              
              10
              
              
              
              46,827
              
              
              
              78,683TOTAL
      ASSETS
              
              
              
              
              
              $
              5,121,170
              
              
              $
              5,443,228LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      Payable
              
              
              8
              
              
              $
              567,245
              
              
              $
              315,624Short
      term borrowings
              
              
              9
              
              
              
              522,113
              
              
              
              310,194Production
      taxes payable
              
              
              
              
              
              
              210,011
              
              
              
              148,6021,299,369
              
              
              
              774,420.Long-Term
      Liabilites:Deferred
      income tax liabilities
              
              
              
              
              
              
              -
              
              
              
              -Long
      Term Notes Payables
              
              
              
              
              
              
              120,862Provision
      for litigations
              
              
              11
              
              
              
              84,883
              
              
              
              96,319Asset
      retirement obligations
              
              
              12
              
              
              
              590,581
              
              
              
              566,279796,326
              
              
              
              662,598TOTAL
      LIABILITIES
              
              
              
              
              
              
              2,095,695
              
              
              
              1,437,018STOCKHOLDERS'
      EQUITYPreferred
      stock, $0.0001 par value, 10,000,000 shares authorized, none issued and
      outstandingCommon
      Stock, $0.0001 par value, 250,000,000 shares authorized, 210,600,000
      shares issued and outstanding   at September 30, 2009 and
      December 31, 2008
              
              
              13
              
              
              
              21,060
              
              
              
              21,060Additional  Paid-in
      Capital
              
              
              
              
              
              
              10,271,174
              
              
              
              10,271,174Accumulated
      Deficit
              
              
              
              
              
              
              (6,944,646
              )
              
              
              (6,102,629
              )Accumulated
      other comprehensive income
              
              
              
              
              
              
              (322,112
              )
              
              
              (183,395
              )3,025,476
              
              
              
              4,006,210TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
              
              
              $
              5,121,170
              
              
              $
              5,443,228





See
accompanying notes to unaudited condensed consolidated financial
statements.

















3








PREMIER
ENERGY CORP. AND SUBSIDARY





Condensed Consolidated Statements of
Operations


(Unaudited)






Three
      months ended
              
              
              Three
      months ended
              
              
              Nine
      months ended
              
              
              Nine
      months endedSeptember
      30, 2009
              
              
              September
      30, 2008
              
              
              September
      30, 2009
              
              
              September
      30, 2008Operating
      revenues:Oil
      and gas production revenue
              
              $
              139,578
              
              
              $
              260,754
              
              
              $
              299,083
              
              
              $
              732,292Other
      revenue
              
              
              -
              
              
              
              481
              
              
              
              -
              
              
              
              481139,578
              
              
              
              261,235
              
              
              
              299,083
              
              
              
              732,773Operating
      expenses:Oil
      and gas production expense
              
              
              69,051
              
              
              
              77,232
              
              
              
              162,138
              
              
              
              289,703Mineral
      extracton tax
              
              
              46,809
              
              
              
              107,908
              
              
              
              116,376
              
              
              
              388,683Depreciation,
      depletion and amortizaton
              
              
              79,037
              
              
              
              92,922
              
              
              
              227,547
              
              
              
              290,244Taxes
      other that income taxes
              
              
              14,829
              
              
              
              23,285
              
              
              
              43,723
              
              
              
              87,708Loss
      on sales proven proven properties
              
              
              -
              
              
              
              111,979
              
              
              
              -
              
              
              
              111,979Marketing
      and transportation expenses
              
              
              62,063
              
              
              
              65,282
              
              
              
              142,043
              
              
              
              255,124General
      and administrative
              
              
              209,381
              
              
              
              142,251
              
              
              
              364,452
              
              
              
              218,907481,170
              
              
              
              618,159
              
              
              
              1,056,279
              
              
              
              1,642,348Operating
      loss
              
              
              (341,592
              )
              
              
              (356,924
              )
              
              
              (757,196
              )
              
              
              (909,575
              )Other
      Income (Expense):Currency
      translation gain/(loss)
              
              
              10,809
              
              
              
              (22,147
              )
              
              
              (22,930
              )
              
              
              (6,937
              )Interest
      expense
              
              
              (12,072
              )
              
              
              (15,602
              )
              
              
              (34,953
              )
              
              
              (47,191
              )(1,263
              )
              
              
              (37,749
              )
              
              
              (57,883
              )
              
              
              (54,128
              )Loss
      Before Provision forIncome
      Taxes
              
              
              (342,855
              )
              
              
              (394,673
              )
              
              
              (815,079
              )
              
              
              (963,703
              )Benefit(Provision)
      for Income Tax
              
              
              (3,107
              )
              
              
              36,188
              
              
              
              (26,938
              )
              
              
              107,391Net
      Loss
              
              $
              (345,962
              )
              
              $
              (358,485
              )
              
              $
              (842,017
              )
              
              $
              (856,312
              )Loss
      Per ShareBasic
      and diluted
              
              $
              (0.00
              )
              
              $
              (0.00
              )
              
              $
              (0.00
              )
              
              $
              (0.00
              )Weighted
      Average Number of Shares Outstanding
              
              
              210,600,000
              
              
              
              210,600,000
              
              
              
              210,600,000
              
              
              
              210,600,000





See
accompanying notes to unaudited condensed consolidated financial
statements.














4











PREMIER
ENERGY CORP. AND SUBSIDIARY





Condensed
Consolidated Statement of
Stockholders’ Equity


For
the period January 1, 2009 through September 30, 2009


(Unaudited)




AccumulatedAdditional
                
                
                Accumulated
                
                
                OtherComprehensive
                
                
                Common
                
                
                Paid-in
                
                
                Deficit
                
                
                Comprehensiveincome/(loss)
                
                
                Shares
                
                
                Stock
                
                
                Capital
                
                
                
                
                
                Income
                
                
                TotalBalance
      at January 1, 2009
                
                
                
                
                
                210,600,000
                
                
                $
                21,060
                
                
                $
                10,271,174
                
                
                $
                (6,102,629
                )
                
                $
                (183,395
                )
                
                $
                4,006,210Net
      loss for nine months ended September 30, 2009
                
                $
                (842,017
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (842,017
                )
                
                
                
                
                
                
                (842,017
                )Foreign
      currency translation adjustment
                
                
                (138,717
                )
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (138,717
                )
                
                
                (138,717
                )$
                (980,734
                )Balance
      at September 30, 2009
                
                
                
                
                
                
                210,600,000
                
                
                $
                21,060
                
                
                $
                10,271,174
                
                
                $
                (6,944,646
                )
                
                $
                (322,112
                )
                
                $
                3,025,476











See
accompanying notes to unaudited condensed consolidated financial
statements.











5











PREMIER
ENERGY CORP. AND SUBSIDIARIES


Condensed
Consolidated Statement of Cash Flows


(Unaudited)




Nine
      months ended
              
              
              Nine
      months endedSeptember
      30, 2009
              
              
              September
      30, 2008Cash
      flows from operating activitiesNet
      (loss)
              
              
              (842,017
              )
              
              
              (856,311
              )Adjustments
      to reconcile net income (loss) to cash provided by (used in) operating
      activities:Depreciation,
      depletion and amortization
              
              
              227,579
              
              
              
              290,244Interest
      expense
              
              
              34,953
              
              
              
              47,191Loss
      on disposals and impairments of assets
              
              
              -
              
              
              
              111,979Deferred
      income taxes
              
              
              31,856
              
              
              
              (190,639
              )Provision
      for litigations
              
              
              -
              
              
              
              96,709Changes
      in operating assets and liabilities:Accounts
      and notes receivable
              
              
              (70,107
              )
              
              
              200,197Inventories
              
              
              (7,493
              )
              
              
              38,108Prepaid
      expenses and taxes
              
              
              18,919
              
              
              
              101,379Prepaid
      and others assets
              
              
              (6,770
              )
              
              
              (15,014
              )Accounts
      payable and accrued expenses
              
              
              370,983
              
              
              
              (427,613
              )Taxes
      payable
              
              
              61,410
              
              
              
              (16,086
              )Net
      Cash Flows used in operating activities
              
              
              (180,687
              )
              
              
              (619,856
              )Cash
      flows from investing activitiesPayments
      to Acquire Oil and Gas properties
              
              
              (541
              )
              
              
              -Payments
      to Acquire Property, Plant and Equipment
              
              
              -
              
              
              
              (2,123
              )Net
      cash used in investing activities
              
              
              (541
              )
              
              
              (2,123
              )Cash
      flows from financing activitiesShort-term
      Borrowings
              
              
              213,419
              
              
              
              438,063Net
      cash provided by financing activities
              
              
              213,419
              
              
              
              438,063Effect
      of exchange rate changes on cash and cash equivalents
              
              
              (31,960
              )
              
              
              183,874Net
      increase (decrease) in cash and cash equivalents
              
              
              231
              
              
              
              (42
              )Cash
      and cash equivalents at beginning of period
              
              
              52
              
              
              
              162Cash
      and cash equivalents at end of period
              
              
              283
              
              
              
              120Supplemental
      disclosures of cash flow information:Interest
      paid
              
              $
              -
              
              
              $
              -Income
      taxes paid
              
              $
              4,599
              
              
              $
              1,130





See
accompanying notes to unaudited condensed consolidated financial
statements.








6





PREMIER
ENERGY CORP.


AND
SUBSIDIARY





NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


SEPTEMBER
30, 2009





Note
1 - Basis of Presentation, Organization and Business Overview





The
accompanying unaudited condensed 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
unaudited consolidated financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company’s Transition
Report on Form 10-K for the transition period ended December 31, 2008, as filed
with the Securities and Exchange Commission (“SEC”). The financial statements
included herein as of September 30, 2009, and for the nine month periods ended
September 30, 2009 and 2008, 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





Premier
Energy Corp. fka Premier Nursing Products, Corp. (the "Company") was
incorporated under the laws of the State of Florida on December 26, 2006. 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
will be 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.








7





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 will be 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 acquisition 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., the former majority shareholder of Premier,
returned 107,406,000 shares of common stock of Premier for
cancellation.





The
accompanying unaudited condensed 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
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 unaudited condensed consolidated 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 unaudited condensed consolidated 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.





8





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 September 30, 2009
            
            
            
            $1
      = RUB30.09;as
      of December 31, 2008
            
            
            
            $1
      = RUB29.38;as
      of March 31, 2008
            
            
            
            $1
      = RUB25.25;as
      of December 31, 2007
            
            
            
            $1
      = RUB24.55.





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




for
      nine months period ended September 30, 2009
            $1
      = RUB32.48;for
      year ended December 31, 2008
            $1
      = RUB24.85;for
      nine months period ended September 30, 2008
            $1
      = RUB24.04;for
      year ended December 31, 2007
            $1
      = RUB25.08.





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 September 30, 2009 and December 31, 2008 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.








9





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 ASC code, 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.





10





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 Accounting Standards Codification
subtopic 360-10 (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, 2008, 2007 and 2006, 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 ASC Topic 410-20 (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.








11





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 $522,113 in loans outstanding under its credit agreements as of
September 30, 2009 and $310,194 in loans outstanding under its credit agreements
as of December 31, 2008.





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





Until
January 1, 2009 operations in the Russian Federation are subject to Federal and
city income tax rates that total 9.5% and a regional income tax rate that varies
from 10.5% to 14.5% at the discretion of the individual regional administration.
The combined statutory tax rate in the Russian Federation is 24%.





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





The
Company follows Accounting Standards Codification subtopic 718-10 (SFAS No. 123R
"Share-Based Payment" ("SFAS 123R"), a revision to SFAS No. 123 "Accounting for
Stock-Based Compensation" ("SFAS 123.) The company has yet to award any stock
compensation, so the adoption of the this pronouncement has had not material
effect on the financial statements





Loss
per Share





Basic and
diluted net loss per common share is computed based upon the weighted average
common shares outstanding as defined by Accounting Standards Codification
subtopic 260-10 (Financial Accounting Standards No. 128, "Earnings per
Share.").  As  of September 30, 2009 and 2008, 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 ASC 820 (Statement of Financial Accounting
Standards No. 157,Fair Value
Measurements (SFAS 157)), which provides a framework for measuring fair
value under GAAP. ASC 820 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. ASC 820
requires that valuation techniques maximize the use of observable inputs and
minimize the use of unobservable inputs. ASC 820 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





C)
            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.





12








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 ASC
820  in the amounts of $522,113 and $310,194 at September 30, 2009 and
December 31, 2008, respectively.





Recent
accounting pronouncements





Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting
Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards
Codification(the “Codification”) as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with U.S.
GAAP. Rules and interpretive releases of the SEC under authority of federal
securities laws are also sources of authoritative U.S. GAAP for SEC registrants.
All guidance contained in the Codification carries an equal level of authority.
The Codification superseded all existing non-SEC accounting and reporting
standards. All other non-grandfathered, non-SEC accounting literature not
included in the Codification is non-authoritative. The FASB will not issue new
standards in the form of Statements, FASB Staff Positions or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates
(“ASUs”). The FASB will not consider ASUs as authoritative in their own right.
ASUs will serve only to update the Codification, provide background information
about the guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout this document have
been updated for the Codification.





In
June 2009, the FASB issued SFAS No. 167,Amendments to FASB Interpretation
No. 46(R) (“SFAS 167”).  SFAS 167, which amends ASC
810-10,Consolidation  (“ASC
810-10”), prescribes a qualitative model for identifying whether a company has a
controlling financial interest in a variable interest entity (“VIE”) and
eliminates the quantitative model prescribed by ASC 810-10.  The new
model identifies two primary characteristics of a controlling financial
interest: (1) provides a company with the power to direct significant
activities of the VIE, and (2) obligates a company to absorb losses of
and/or provides rights to receive benefits from the VIE.  SFAS 167
requires a company to reassess on an ongoing basis whether it holds a
controlling financial interest in a VIE.  A company that holds a
controlling financial interest is deemed to be the primary beneficiary of the
VIE and is required to consolidate the VIE.  SFAS 167, which is
referenced in ASC 105-10-65, has not yet been adopted into the Codification and
remains authoritative.  This statement is effective for fiscal years
beginning after November 15, 2009.  The Company plans to adopt
SFAS 167 effective January 1, 2010.  The adoption of SFAS 167 is
not expected to have a material impact on the Company’s consolidated financial
position and results of operations.





In
June 2009, the FASB issued SFAS No. 166,Accounting for Transfers of
Financial Assets (“SFAS 166”).  SFAS 166 removes the concept of
a qualifying special-purpose entity from ASC 860-10,Transfers and
Servicing (“ASC 860-10”), and removes the exception from applying ASC
810-10.  This statement also clarifies the requirements for isolation
and limitations on portions of financial assets that are eligible for sale
accounting.  SFAS 166, which is referenced in ASC 105-10-65, has not
yet been adopted into the Codification and remains
authoritative.  This statement is effective for fiscal years beginning
after November 15, 2009.  The Company plans to adopt SFAS 166
effective January 1, 2010.  The adoption of SFAS 166 is not
expected to have a material impact on the Company’s consolidated financial
position and results of operations.





In
October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue
Arrangements—a consensus of the FASB Emerging Issues Task Force, that
provides amendments to the criteria for separating consideration in
multiple-deliverable arrangements. As a result of these amendments,
multiple-deliverable revenue arrangements will be separated in more
circumstances than under existing U.S. GAAP. The ASU does this by establishing a
selling price hierarchy for determining the selling price of a deliverable. The
selling price used for each deliverable will be based on vendor-specific
objective evidence if available, third-party evidence if vendor-specific
objective evidence is not available, or estimated selling price if neither
vendor-specific objective evidence nor third-party evidence is available. A
vendor will be required to determine its best estimate of selling price in a
manner that is consistent with that used to determine the price to sell the
deliverable on a standalone basis. This ASU also eliminates the residual method
of allocation and will require that arrangement consideration be allocated at
the inception of the arrangement to all deliverables using the relative selling
price method, which allocates any discount in the overall arrangement
proportionally to each deliverable based on its relative selling price. Expanded
disclosures of qualitative and quantitative information regarding application of
the multiple-deliverable revenue arrangement guidance are also required under
the ASU. The ASU does not apply to arrangements for which industry specific
allocation and measurement guidance exists, such as long-term construction
contracts and software transactions. ASU No. 2009-13 is effective beginning
January 1, 2011. The Company is currently evaluating the impact of this
standard on its consolidated results of operations and financial
condition.





In
October 2009, the FASB issued ASU No. 2009-14, Certain Revenue Arrangements That
Include Software Elements—a consensus of the FASB Emerging Issues Task
Force, that reduces the types of transactions that fall within the
current scope of software revenue recognition guidance. Existing software
revenue recognition guidance requires that its provisions be applied to an
entire arrangement when the sale of any products or services containing or
utilizing software when the software is considered more than incidental to the
product or service. As a result of the amendments included in ASU
No. 2009-14, many tangible products and services that rely on software will
be accounted for under the multiple-element arrangements revenue recognition
guidance rather than under the software revenue recognition guidance. Under the
ASU, the following components would be excluded from the scope of software
revenue recognition guidance:  the tangible element of the product,
software products bundled with tangible products where the software components
and non-software components function together to deliver the product’s essential
functionality, and undelivered components that relate to software that is
essential to the tangible product’s functionality. The ASU also provides
guidance on how to allocate transaction consideration when an arrangement
contains both deliverables within the scope of software revenue guidance
(software deliverables) and deliverables not within the scope of that guidance
(non-software deliverables). ASU No. 2009-14 is effective beginning
January 1, 2011. The Company is currently evaluating the impact of this
standard on its consolidated results of operations and financial
condition.





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 September 30, 2009, 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.








13





Note 3 - Going concern
(continued)





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
nine months period ended September 30, 2009, sales to one unrelated customers
represented 100% of total revenue (over nine months ended September 30, 2008 –
sales to hundred unrelated customers represented 100% of total
revenue).





Note
5 - Inventories.





Inventories
are summarized as follows:





As
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008Inventories
      of crude oil (less valuation allowance $41,802 and $90,241 as of September
      31, 2009 and December 31, 2008, respectively)
            
            $
            32,272
            
            
            $
            23,608Raw
      materials
            
            
            96,392
            
            
            
            97,563$
            128,665
            
            
            $
            121,171





Note
6 - Prepaid taxes and expenses.





Prepaid
taxes and expenses include:





As
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008VAT
      receivable
            
            $
            420,518
            
            
            $
            432,160Current
      Income Tax Receivables
            
            
            4,021
            
            
            
            115Other
      taxes receivable
            
            
            7,604
            
            
            
            19,249Deferred
      expenses
            
            
            703
            
            
            
            241$
            432,846
            
            
            $
            451,765











14





Note
7 - Prepaid and other assets.





Prepaid
and other assets include:





As
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008Prepayments
            
            $
            20,092
            
            
            $
            10,773Loans
      to related parties
            
            
            -
            
            
            
            2,550Advances
      to Employees
            
            
            30,000
            
            
            
            -$
            50,092
            
            
            $
            13,323





Note
8 -  Accounts payable and accrued expenses





Accounts
payable and accrued expenses are summarized as follows:





As
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008Trade
      accounts payable
            
            $
            245,227
            
            
            $
            234,183Wages
      and salaries payable
            
            
            85,289
            
            
            
            33,810Other
      accounts payable
            
            
            236,729
            
            
            
            47,631$
            567,245
            
            
            $
            315,624





Note
9 -  Borrowings





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





As
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008Interest
      free, unsecured loans from RossGas, LLC a related party (debt is repayable
      on mutual consent)
            
            $
            119,266
            
            
            $
            -Interest
      free, unsecured loans from Vlasov N.V. a related party (debt is repayable
      on mutual consent)
            
            
            84,740
            
            
            
            -Interest
      free, unsecured loans from Galazov A.A. a related party (debt is repayable
      on mutual consent)
            
            
            103,349
            
            
            
            -Interest
      free, unsecured loan from Tintrade Limited ($300,000 is overdue, for
      disclosure see Note 11)
            
            
            200,000
            
            
            
            300,000Interest
      free, unsecured loans from members of staff
            
            
            14,758
            
            
            
            10,194$
            522,113
            
            
            $
            310,194





As of
February 10, 2009, Karbon reached an out-of-court settlement with Tintrade Ltd
and subsequently settled approximately $11,300 worth of court fees according to
the payment plan agreed upon with Tintrade Ltd.







15





Note
10 - Deferred tax assets and liabilities





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





GROSS
      ASSETS
            
            
            GROSS
      LIABILITIES
            
            
            NET
      ASSETSAs
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008
            
            
            As
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008
            
            
            As
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008Property,
      plant and equipment
            
            $
            443
            
            
            $
            544
            
            
            $
            -
            
            
            $
            -
            
            
            $
            443
            
            
            $
            544Proved
      Oil and Gas properties
            
            
            11,368
            
            
            
            31,441
            
            
            
            -
            
            
            
            -
            
            
            
            11,368
            
            
            
            31,441Inventories
            
            
            8,360
            
            
            
            21,658
            
            
            
            -
            
            
            
            -
            
            
            
            8,360
            
            
            
            21,658Accounts
      payable
            
            
            1,256
            
            
            
            3,088
            
            
            
            -
            
            
            
            -
            
            
            
            1,256
            
            
            
            3,088Assets
      retirement obligations
            
            
            35,038
            
            
            
            33,798
            
            
            
            -
            
            
            
            -
            
            
            
            35,038
            
            
            
            33,798Borrowings
            
            
            -
            
            
            
            -
            
            
            
            (9,638
            )
            
            
            (11,846
            )
            
            
            (9,638
            )
            
            
            (11,846
            )Deferred
      tax assets/(liabilities)
            
            $
            56,464
            
            
            $
            90,529
            
            
            $
            (9,638
            )
            
            $
            (11,846
            )
            
            $
            46,827
            
            
            $
            78,683





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





Note
11 – Provision for litigation





The
Company is litigating with Tintrade Limited, a lender of the Company, with
regard to repayment of a $300,000 loan that matured in June 2003.  The
lender is also claiming penalties and court fees to be recovered.





The
Company has paid $100,000 off their liability to Tintrade Limited as part of an
out-of-court settlement agreement and service of payment
commitment.





Full
provision for the amounts in questions has been recognized in the reporting
period.





Note
12 – Assets retirement obligations





As
      of
              September
      30, 2009
              (unaudited)
            
            
            As
      of
              December
      31, 2008Beginning
      asset retirement obligation
            
            $
            555,881
            
            
            $
            616,185Liabilities
      incurred
            
            
            -
            
            
            
            -Liabilities
      settled
            
            
            -
            
            
            
            -Accretion
      expense
            
            
            11,737
            
            
            
            61,059Revision
      to estimated cash flows
            
            
            -
            
            
            
            -Foreign
      currency translation
            
            
            22,962
            
            
            
            (110,965
            )Ending
      asset retirement obligation
            
            $
            590,581
            
            
            $
            566,279





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.








16





Note
13 - 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 shares of common stock
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 the
transaction, there are currently outstanding 210,600,000 common shares of which
ZRV owns 162,000,000 common shares or approximately 77% of the outstanding
common shares.





Note
14 - Operating lease





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





US
      Dollars3
      months ended December 31, 2009
            
            $
            15,777Year
      ended December 31, 2010
            
            
            -$
            15,777








The
Company rents office space and the monthly rental as at September 30, 2009 was
$2,568. The Monthly Rental is paid on or before the first day of each month. The
Tenancy Agreement expires in December 2009. 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 September 30,
2009 was $2,691. The Monthly Rental is paid on or before the first day of each
month. The Land Lease Agreement expires in December 2009. 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.








17





Note
15 - Related party transactions





In the
nine month period ended September 30, 2009, related parties paid for expenses on
behalf of the Company. The related parties are entities owned by a major
shareholder of Premier Energy Corp. In the nine month period ended September 30,
2009 the Company did not enter into transactions with related parties that are
material either to the Company or any related party, or that are unusual in
their nature of conditions.





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




As
      of September 30, 2009
              (unaudited)
            
            
            As
      of December 31, 2008Receivable
      from related parties:Receivable
      from companies under common control and key members of staff, non-interest
      bearing loans
            
            $
            -
            
            
            $
            2,551Total
      receivable from related parties
            
            $
            -
            
            
            $
            2,551Payable
      to related parties:Payable
      to companies under common control, trade
            
            $
            163,875
            
            
            $
            136,911Payable
      to companies under common control, non interest bearing
            
            
            322,113
            
            
            
            10,194Total
      payable to related parties
            
            $
            485,987
            
            
            $
            147,105




Note
16 - 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.





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.




18







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 September 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 September 30, 2009 the Company
recorded accrued
salary of $95,833.33.







19








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





Note
17 - Subsequent events





None.








20








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. See our annual report in current filing 8-K/A for the year ended
December 31, 2008 filed with the SEC on February 27, 2009.





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 nine-month period ended September 30,
2009.





•
            
            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 nine months ended September
      30, 2009 and 2008, 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 nine-month periods ended September 30, 2009 and
2008.


COMPARISON
OF THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
 
 EXECUTIVE
SUMMARY
 
 The
following is an executive summary of what Premier Energy Corp. believes are
important results as of and during the three months ended September 30, 2009,
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 September 30, 2009 decreased 46% to
      $0.14 million from $0.26 million in the comparable period in
      2008.
 
 •
              
              Gross
      profit margin decreased 41.6% for the three months ended September 30,
      2009 to 16.9% from 29.1% in the comparable period in 2008, primarily
      resulting from lower sales.
 
 •
              
              Selling,
      general and administrative expenses as a percentage of revenue were
      150.01% and 54.4% for the three months ended September 30, 2009 and 2008,
      respectively, which was primarily due to decreases in, among other
      factors, additional legal, consult and audit
  expenses.
 
 •
              
              Marketing
      and transportation expenses were almost same for both period ie $0.06
      million at the three month period ended September, 2008 and September 30,
      2009.





21








COMPARISON
OF NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008





EXECUTIVE
SUMMARY





The
following is an executive summary of what Premier Energy Corp. believes are
important results as of and during the nine months ended September 30, 2009,
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 nine months ended September 30, 2009 decreased 59% to
      $0.29 million from $0.73 million in the comparable period in
      2008.





•
            
            Deterioration
      in current ratio (defined as current assets divided by current
      liabilities) of 62.62% at September 30, 2009 as compared to 86.73% at
      December 31, 2008.





•
            
            Gross
      profit margin decreased 7.3% points for the nine months ended September
      30, 2009 to (6.87)% from (7.4)% in the comparable period in 2008,
      primarily resulting from lower
sales.





•
            
            Selling,
      general and administrative expenses as a percentage of revenue were
      121.86% and 29.8% for the nine months ended September 30, 2009 and 2008,
      respectively, which was primarily due to increases in, among other
      factors, additional legal, consult and audit
  expenses.





•
            
            Marketing
      and transportation expenses were down by 44%, value falling from $0.22
      million at the nine month period ended September, 2008 to $0.16 million at
      September 30, 2009.





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 NoteSummary of Significant Accounting
Policies, of the Notes to Unaudited Condensed Consolidated Financial
Statements included in Item 1. Financial Statements. Please also refer to
our transition report on Form 10-K for the transition period ended
December 31, 2008 filed with the SEC on May 1, 2009 for a more detailed
discussion of our critical accounting estimates.





NEW
ACCOUNTING STANDARDS




Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting
Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards
Codification(the “Codification”) as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with U.S.
GAAP. Rules and interpretive releases of the SEC under authority of federal
securities laws are also sources of authoritative U.S. GAAP for SEC registrants.
All guidance contained in the Codification carries an equal level of authority.
The Codification superseded all existing non-SEC accounting and reporting
standards. All other non-grandfathered, non-SEC accounting literature not
included in the Codification is non-authoritative. The FASB will not issue new
standards in the form of Statements, FASB Staff Positions or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates
(“ASUs”). The FASB will not consider ASUs as authoritative in their own right.
ASUs will serve only to update the Codification, provide background information
about the guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout this document have
been updated for the Codification.





In
June 2009, the FASB issued SFAS No. 167,Amendments to FASB Interpretation
No. 46(R) (“SFAS 167”).  SFAS 167, which amends ASC
810-10,Consolidation  (“ASC
810-10”), prescribes a qualitative model for identifying whether a company has a
controlling financial interest in a variable interest entity (“VIE”) and
eliminates the quantitative model prescribed by ASC 810-10.  The new
model identifies two primary characteristics of a controlling financial
interest: (1) provides a company with the power to direct significant
activities of the VIE, and (2) obligates a company to absorb losses of
and/or provides rights to receive benefits from the VIE.  SFAS 167
requires a company to reassess on an ongoing basis whether it holds a
controlling financial interest in a VIE.  A company that holds a
controlling financial interest is deemed to be the primary beneficiary of the
VIE and is required to consolidate the VIE.  SFAS 167, which is
referenced in ASC 105-10-65, has not yet been adopted into the Codification and
remains authoritative.  This statement is effective for fiscal years
beginning after November 15, 2009.  The Company plans to adopt
SFAS 167 effective January 1, 2010.  The adoption of SFAS 167 is
not expected to have a material impact on the Company’s consolidated financial
position and results of operations.





In
June 2009, the FASB issued SFAS No. 166,Accounting for Transfers of
Financial Assets (“SFAS 166”).  SFAS 166 removes the concept of
a qualifying special-purpose entity from ASC 860-10,Transfers and
Servicing (“ASC 860-10”), and removes the exception from applying ASC
810-10.  This statement also clarifies the requirements for isolation
and limitations on portions of financial assets that are eligible for sale
accounting.  SFAS 166, which is referenced in ASC 105-10-65, has not
yet been adopted into the Codification and remains
authoritative.  This statement is effective for fiscal years beginning
after November 15, 2009.  The Company plans to adopt SFAS 166
effective January 1, 2010.  The adoption of SFAS 166 is not
expected to have a material impact on the Company’s consolidated financial
position and results of operations.





In
October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue
Arrangements—a consensus of the FASB Emerging Issues Task Force, that
provides amendments to the criteria for separating consideration in
multiple-deliverable arrangements. As a result of these amendments,
multiple-deliverable revenue arrangements will be separated in more
circumstances than under existing U.S. GAAP. The ASU does this by establishing a
selling price hierarchy for determining the selling price of a deliverable. The
selling price used for each deliverable will be based on vendor-specific
objective evidence if available, third-party evidence if vendor-specific
objective evidence is not available, or estimated selling price if neither
vendor-specific objective evidence nor third-party evidence is available. A
vendor will be required to determine its best estimate of selling price in a
manner that is consistent with that used to determine the price to sell the
deliverable on a standalone basis. This ASU also eliminates the residual method
of allocation and will require that arrangement consideration be allocated at
the inception of the arrangement to all deliverables using the relative selling
price method, which allocates any discount in the overall arrangement
proportionally to each deliverable based on its relative selling price. Expanded
disclosures of qualitative and quantitative information regarding application of
the multiple-deliverable revenue arrangement guidance are also required under
the ASU. The ASU does not apply to arrangements for which industry specific
allocation and measurement guidance exists, such as long-term construction
contracts and software transactions. ASU No. 2009-13 is effective beginning
January 1, 2011. The Company is currently evaluating the impact of this
standard on its consolidated results of operations and financial
condition.







22


In
October 2009, the FASB issued ASU No. 2009-14, Certain Revenue
Arrangements That Include Software Elements—a consensus of the FASB Emerging
Issues Task Force, that reduces the types of transactions that fall
within the current scope of software revenue recognition guidance. Existing
software revenue recognition guidance requires that its provisions be applied to
an entire arrangement when the sale of any products or services containing or
utilizing software when the software is considered more than incidental to the
product or service. As a result of the amendments included in ASU
No. 2009-14, many tangible products and services that rely on software will
be accounted for under the multiple-element arrangements revenue recognition
guidance rather than under the software revenue recognition guidance. Under the
ASU, the following components would be excluded from the scope of software
revenue recognition guidance:  the tangible element of the product,
software products bundled with tangible products where the software components
and non-software components function together to deliver the product’s essential
functionality, and undelivered components that relate to software that is
essential to the tangible product’s functionality. The ASU also provides
guidance on how to allocate transaction consideration when an arrangement
contains both deliverables within the scope of software revenue guidance
(software deliverables) and deliverables not within the scope of that guidance
(non-software deliverables). ASU No. 2009-14 is effective beginning
January 1, 2011. The Company is currently evaluating the impact of this
standard on its consolidated results of operations and financial
condition.
 RESULTS
OF OPERATIONS
 
 Three
Months Ended September, 2009 and 2008
 
 The
following summarizes our operational highlights during three months ended
September 30, 2009:
 
 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 forthree months ended September 30, 2009
and September 30, 2008 (in US Dollars):
 For
      three months ended September 30,2009
                
                
                2008Oil
      revenue
                
                $
                139,578
                
                
                $
                260,754Net
      Oil sold (Bbls)
                
                
                4,864
                
                
                
                5,153Average
      price of oil sold (per bbl)
                
                $
                28.69
                
                
                $
                50.60Average
      production and transportation cost (per bbl)
                
                $
                36.58
                
                
                $
                48.07
 
 During
three months ended September 30, 2009, the Company’s domestic oil revenues were
down by 46.5%, due to decreased oil production by 16% and decrease of selling
price by 43%.


The
Company’s domestic oil operating expenses decreased 37.4%, value falling from
$0.18 million at the prior the three month period ended September 30, 2008 to
$0.11 million at September 30, 2009. The decrease in rate of Mineral Extraction
Tax (NDPI), marketing and transportation expenses and oil and gas production
expense are the primary reason for the overall decrease in the operating
expenses. Falling oilfield costs and the same level of production during the
period of three months ended September 30, 2009 resulted in lower costs per
bbl.





Nine
Months Ended September, 2009 and 2008





The
following summarizes our operational highlights during nine months ended
September 30, 2009:





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 fornine months ended September 30, 2009 and September 30, 2008 (in US
Dollars):





For
      nine months ended September 30,2009
            
            
            2008Oil
      revenue
            
            $
            299,083
            
            
            $
            732,292Net
      Oil sold (Bbls)
            
            
            16,188
            
            
            
            20,787Average
      price of oil sold (per bbl)
            
            $
            18.48
            
            
            $
            35.23Average
      production and transportation cost (per bbl)
            
            $
            25,98
            
            
            $
            44.91





During
nine months ended September 30, 2009, the Company’s domestic oil revenues were
down by 59%, due to decreased oil production by 32.4% and decrease of selling
price by 47.6%.





The
Company’s domestic oil operating expenses decreased 58.9%, value falling from
$0.68 million at the prior the nine month period ended September 30, 2008 to
$0.28 million at September 30, 2009. The decrease in rate of Mineral Extraction
Tax (NDPI), marketing and transportation expenses and oil and gas production
expense are the primary reason for the overall decrease in the operating
expenses. Falling oilfield costs and the same level of production during the
period of nine months ended September 30, 2009 resulted in lower costs per
bbl.




23








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
September 30, 2009 there have been no significant material
developments.





Results
of Operations achieved during three months ended September 30, 2009 Compared to
three months ended September 30, 2008





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 September 30,
2009 of $0.345 million compared to a net loss of $0.358 million for the same
period in 2008. Factors contributing to the $0.0125 million decrease in net loss
from three months ended September 30, 2008 to three months ended September 30,
2009 included the following:





·
            Oil
      production net of our interest for three months ended September 30, 2009
      was 4,864 Bbls resulting in $139,578 worth of oil sales, at an average
      wellhead price of $28.69 per Bbls for the three months ended September 30,
      2009.·
            In
      2008, our net production was 5,153 Bbls resulting in $260,754 worth of oil
      sales, at an average wellhead price of $50.60.·
            The
      16.3% decrease in production volumes resulted from abandonment of oil
      production from Wells 108, 130 and 133 due to operating necessity of work
      over activities.





Our
marketing and transportation expenses and production taxes (mineral extraction
tax) for three months ended September 30, 2009 decreased to $108,872 (36% over
three months ended September 30, 2008).





General
and administrative expenses increased from $142,251 for the three months ended
September 30, 2008 to $209,382 for the three months ended September 30, 2009,
due largely to:





·
            Increase
      in 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 nine months ended September 30, 2009 Compared to
nine months ended September 30, 2008





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.







24





We had
net loss from continuing operations for the nine months ended September 30, 2009
of $0.84 million compared to a net loss of $0.86 million for the same period in
2008. Factors contributing to the $0.014 million decrease in net loss from nine
months ended September 30, 2008 to nine months ended September 30, 2009 included
the following:





·
            Oil
      production net of our interest for nine months ended September 30, 2009
      was 16,188 Bbls resulting in $299,083 worth of oil sales, at an average
      wellhead price of $18.48 per Bbls for the nine months ended September 30,
      2009.·
            In
      2008, our net production was 20,787 Bbls resulting in $732,292 worth of
      oil sales, at an average wellhead price of
  $35.23.





·
            The
      32% decrease in production volumes resulted from abandonment of oil
      production from Wells 108, 130 and 133 due to operating necessity of work
      over activities.





Our
marketing and transportation expenses and production taxes (mineral extraction
tax) for nine months ended September 30, 2009 decreased to $258,419 (59% over
nine months ended September 30, 2008).





General
and administrative expenses increased from $218,907 for the nine months ended
September 30, 2008 to $364,453 for the nine months ended September 30, 2009, due
largely to:





·
            Increase
      in 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.








LIQUIDITY
AND CAPITAL RESOURCES





We have
historically met our capital requirements through the issuance of common stock,
obtaining contributions ofAdditional Paid-In Capital from ou r 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.  There is no guarantee that we will be able to generate
adequate revenues or obtain further capital through equity and/or
debt.  In the event that we do not generate adequate revenue or raise
capital, our operations will be negatively impacted.





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
and full work-over on additional two shut-in wells by the end of 2009. The aim
is to increase production rate in this year from the present 60 bopd to the
expected 400 bopd from the existing wells. We expect to engage local Russian
contractors, Almaz Service and ServiceNefteGaz, specializing in oil well
work-over and modernization, to provide the required work at the
North-Kopanskoye Oilfield in 2009 assuming we raise the required
capital.





Subject
to the availability of funds, the current plans also call for other concurrent
work, including drilling and completion of three new production wells in 2009 at
the North-Kopanskoye Oilfield. 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.





For the nine months ended September 30,
2009 and the nine months ended June 30, 2008, we have incurred net losses of
approximately $720,155  and $856,312  respectively. We have
funded our working capital needs primarily from revenues and advances from our
principal stockholders which generated cash from equity offerings on the stock
exchanges in the European Union (EU) and sales on the over-the-counter market in
the USA.





As of September 30, 2009, we were
listed on electronic trading system XETRA of Frankfurt Stock Exchange
(symbol:P79.ETR),
on the open market of the Frankfurt Stock Exchange (symbol:P79.FSE), the Berlin
StockExchange
(symbol:P79.BER)and the Nasdaq
Over-The-CounterBulletin Board
(symbol:PNRC).





As of November 02, 2009 we signed a
Non-Binding Letter of Intent with Rossgaz LLC, a limited liability company
incorporated in the Russian Federation, to acquire all of the issued and
outstanding securities of Speckrit LLC and the remaining 49% interest in Karbon
CJSC, both owned by Rossgaz and its affiliates.





The LOI sets forth the basic terms of
the intended share purchase transaction and reflects the current, good faith
intentions of Premier, Speckrit, Rossgaz and their respective stockholders.
Premier Energy Corp. is responsible for raising all capital for the cash
consideration of $65 million to be used to acquire the securities and retire
outstanding debt. The transaction was required to close by December 10,
2009.





However, we have no binding agreements
or understandings with any potential acquisition targets. There is no assurance
that we will be able to obtain additional capital in the amount or, on terms
acceptable to us, in the required timeframe.





As of November 20, 2009 we became
additionally listed on the Stuttgart Stock Exchange (symbol: P79.FSE) in the EU
and our market capitalization was recorded at EUR 7.18 Mil. ($10,67 mln.) at the
day. Our combined market capitalization on NASDAQ currently (as of November 20,
2009) exceeds $168 mln.





As of November 20, 2009, our principal
stockholders realized some of the total registered shares on the markets in USA
and EU and created $ 0,3 mln. worth of contingent assets receivable by Premier
Energy Corp. under the post balance sheet arrangements.





Over the next twelve months we believe
we have the required working capital needs to fund our current operations
through revenues and further and further advances from our principal
stockholders. However, any expansion or future business acquisitions will
require us to raise capital through an equity offering and/or debt
financing.  We believe there may be distressed situations that will
arise in the remainder of 2009 that may make the acquisition of assets a viable
strategy, and we will evaluate any potential opportunities as they arise.
However, there can be no assurance that any additional capital for use in such
acquisition will be available to us on favorable terms or at
all.





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, 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.








25





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 2009 is currently estimated at $19.3 million for the
planned drilling of 7 new wells in the North Kopanskoye Field and $8.5 millions
for the oil field construction of surface facilities. Our planned 2009
development and exploration expenses could also 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





Based on
an evaluation under the supervision and with the participation of the Company’s
management, the Company’s principal executive officer and principal financial
officer have concluded that the Company’s 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”) were not effective as of September 30, 2009 to
ensure that information required to be disclosed by the Company in reports that
it files or submits under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission rules and forms and (ii) accumulated and communicated
to the Company’s management, including its principal executive officer and
principal financial officer, as appropriate to allow timely decisions regarding
required disclosure.  Our disclosure controls and procedures were not
effective as the Company did not have the needed accounting personnel to perform
required functions.  In order to remediate this weakness, during the
second quarter of 2009, the Company engaged RBSM LLP as an independent
consultant to evaluate its needs and provided needed accounting
services.





Changes
in Internal Control Over Financial Reporting





There
were no changes in the Company’s internal control over financial reporting
during the quarter ended September 30, 2009, 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.








26





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. Except as
set forth below, 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.





·
            Tintrade
      Limited, a lender of Karbon, filed suit against Karbon in Russia with
      regard to repayment of a $300,000 loan that matured in June 2003. Tintrade
      Limited is also claiming penalties and court fees to be
      recovered.  The Company has paid $100,000 to Tintrade Limited as
      part of an out-of-court settlement agreement and service of payment
      commitment.








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





Unless
otherwise noted, the issuances noted below are all considered exempt from
registration by reason of Section 4(2) of the Securities Act of 1933, as
amended, and/or Rule 506 as promulgated under Regulation D:





On
January 30, 2009, we entered into a Share Exchange Agreement with Auxerre
Trading Ltd., a British Virgin Islands Company (“Auxerre”) pursuant to which we
acquired 51% of the outstanding securities of Karbon in exchange for 107,406,000
shares of our common stock (the “Karbon Acquisition”).




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





Item
3.  Defaults Upon Senior Securities





None.





Item
4.  Submission of Matters to a Vote of Security Holders




None.





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










27








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:
      November 23, 2009
            By:
            /s/ Anton
      ProdonavicAnton
      Prodonavic, Chief Executive Officer and Director
              (Principal
      Executive Officer)





By:
            /s/ Alexey
      GoleshevAlexey
      Goleshev, Chief Financial Officer and Director
              (Principal
      Financial Officer)