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

|  Large accelerated filer o            |  Accelerated filer o         |
|---------------------------------------------------------------------------------------------------|-----------------------------------|
|  Non-accelerated filer      o         |  Smaller reporting company x |

----

| PART I- FINANCIAL INFORMATION                                                  |                                                                                         |
|--------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------|
|                                                                           |                                                                                         | Page |
| Item 1.                                                                        |  Financial Statements.                                                                  | 3 |
|                                                                           |                                                                                         |   |
| Item 2.                                                                        |  Management's Discussion and Analysis of Financial Condition and Results of Operations. | 17 |
|               |                                                                                         |   |
| Item 3.                                                                        |  Quantitative and Qualitative Disclosures About Market Risk.                            | 24 |
|                                                                           |                                                                                         |   |
| Item 4.                                                                        |  Controls and Procedures.                                                               | 24 |
|                                                                           |                                                                                         |   |
| PART II - OTHER INFORMATION                                               |                                                                                         |
|                                                                           |                                                                                         |   |
| Item 1.                                                                        | Legal Proceedings.                                                                           | 25 |
|                                                                           |                                                                                         |   |
| Item 1a.                                                                       | Risk Factors                                                                                 | 25 |
|                                                                           |                                                                                         |   |
| Item 2.                                                                        | Unregistered Sales of Equity Securities and Use of Proceeds.                                 | 25 |
|                                                                           |                                                                                         |   |
| Item 3.                                                                        | Defaults Upon Senior Securities.                                                             | 25 |
|                                                                           |                                                                                         |   |
| Item 4.                                                                        | Reserved.                                                                                    | 25 |
|                                                                           |                                                                                         |   |
| Item 5.                                                                        | Other Information.                                                                           | 25 |
|                                                                           |                                                                                         |   |
| Item 6.                                                                        | Exhibits.                                                                                    | 25 |

----

| ASSETS                                     |   |
|--------------------------------------------|--------|
|                                       |   |   |   |   |   |   | June 30, 2010 |   |   | December 31, 2009 |   |
|                                       |   |   |   | Note |   |   | (unaudited) |   |   | (audited) |   |
| Current Assets:                            |   |   |   |   |   |   |   |   |   |
|                                       |   | Cash |   |   |   |   | $ | 11,604 |   |   | $ | 441 |   |
|                                       |   | Accounts and notes receivables, net |   |   |   |   |   | 90,527 |   |   |   | 92,936 |   |
|                                       |   | Inventories |   |   | 5 |   |   |   | 113,242 |   |   |   | 207,532 |   |
|                                       |   | Prepaid taxes and expenses |   |   | 6 |   |   |   | 415,696 |   |   |   | 429,695 |   |
|                                       |   | Prepaid and other assets |   |   | 7 |   |   |   | 20,165 |   |   |   | 18,204 |   |
|                                       |   |   |   |   |   |   |   |   | 651,235 |   |   |   | 748,808 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property, Plant and Equipment:             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | Proven Oil and Gas properties (successful efforts), at cost |   |   |   |   |   |   | 7,785,853 |   |   |   | 8,030,724 |   |
|                                       |   | Less- accumulated depletion, depreciation and amortization |   |   |   | (3,860,772 | ) |   |   | (3,848,448 | ) |
|                                       |   | Other property, plant and equipment |   |   |   |   |   |   | 98,093 |   |   |   | 100,702 |   |
|                                       |   | Less- accumulated depreciation |   |   |   |   |   |   | (92,052 | ) |   |   | (89,830 | ) |
|                                       |   |   |   |   |   |   |   |   | 3,931,122 |   |   |   | 4,193,146 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deferred Income tax assets                 |   |   | 10 |   |   |   | 57,889 |   |   |   | 64,203 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL ASSETS                               |   |   |   |   |   | $ | 4,640,246 |   |   | $ | 5,006,157 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY       |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current Liabilities:                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   | Accounts Payable |   |   | 8 |   |   | $ | 1,069,928 |   |   | $ | 686,161 |   |
|                                       |   | Short term borrowings |   |   | 9 |   |   |   | 656,892 |   |   |   | 522,844 |   |
|                                       |   | Short term account payable under out-of-court settlement |   |   |   |   |   |   | 84,801 |   |   |   | - |   |
|                                       |   | Production taxes payable |   |   |   |   |   |   | 445,571 |   |   |   | 314,460 |   |
|                                       |   | Provision for litigations |   |   |   |   |   |   | - |   |   |   | 84,872 |   |
|                                       |   |   |   |   |   |   |   |   | 2,257,192 |   |   |   | 1,608,336 |   |
|                                       | .      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-Term Liabilities:                     |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |   | Asset retirement obligations |   |   | 11 |   |   |   | 606,059 |   |   |   | 600,115 |   |
|                                       |   |   |   |   |   |   |   |   |   | 606,059 |   |   |   | 600,115 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES                          |   |   |   |   |   |   | 2,863,251 |   |   |   | 2,208,451 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STOCKHOLDERS' EQUITY                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |   | Preferred stock, $0.0001 par value, 10,000,000 shares authorized, none |   |   |   |   |   |   |   |   |   |
|                                       |   |   | issued and outstanding |   |   |   |   |   |   |   |   |   |   | - |   |
|                                       |   |   | Common Stock, $0.0001 par value, |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                       |   |   | 255,000,000 and 250,000,000 shares authorized, 212,600,000 and 210,600,000 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively |   |   | 12  |   |   |   | 21,260 |   |   |   | 21,060 |   |
|                                       |   |   | Additional  Paid-in Capital |   |   |   |   |   |   | 10,503,677 |   |   |   | 10,503,677 |   |
|                                       |   |   | Accumulated Deficit |   |   |   |   |   |   | (8,345,812 | ) |   |   | (7,392,870 | ) |
|                                       |   |   | Accumulated other comprehensive income |   |   |   |   |   |   | (402,130 | ) |   |   | (334,162 | ) |
|                                       |   |   |   |   |   |   |   |   |   | 1,776,995 |   |   |   | 2,797,705 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |   |   |   |   |   | $ | 4,640,246 |   |   | $ | 5,006,157 |   |
|                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                          |                                     |   | Three months ended |     |   | Three months ended |        |
|-----------------------------------------------|------------------------------------------|--------|--------------------|----------|--------|--------------------|-------------|
|                                          |                                     |   | June 30, 2010      |     |   | June 30, 2009      |        |
|                                          |                                     |   | (unaudited)        |     |   | (unaudited)        |        |
|                                          |                                     |   |               |     |   |               |        |
|                                          |                                     |   |               |     |   |               |        |
| Operating revenues:                           |                                     |   |               |     |   |               |
|                                          | Oil and gas production revenue           |   | $                  | 93,170   |   |               | $           | 91,089 |   |
| Operating expenses:                           |                                     |   |               |     |   |               |        |   |
|                                          | Oil and gas production expense           |   |               | 321,961  |   |               |        | 35,250 |   |
|                                          | Mineral extraction tax                   |   |               | 34,721   |   |               |        | 40,404 |   |
|                                          | Depreciation, depletion and amortization |   |               | 76,346   |   |               |        | 75,782 |   |
|                                          | Taxes other that income taxes            |   |               | 13,357   |   |               |        | 14,687 |   |
|                                          | Marketing and transportation expenses    |   |               | 82,836   |   |               |        | 41,512 |   |
|                                          | General and administrative               |   |               | 80,413   |   |               |        | 10,825 |   |
|                                          |                                     |   |               | 609,633  |   |               |        | 218,460 |   |
|                                          |                                     |   |               |     |   |               |        |   |   |
| Operating loss                                |                                     |   | (516,663           | )        |   |               | (127,371    | ) |
|                                          |                                     |   |               |     |   |               |        |   |   |
| Other Income (Expense):                       |                                     |   |               |     |   |               |        |   |
|                                          | Currency translation gain/(loss)         |   |               | (17,112  | )      |               |        | 17,582 |   |
|                                          | Other income                             |   |               | 43,409   |   |               |        | - |   |
|                                          | Interest expense                         |   |               | (38,838  | )      |               |        | (11,221 | ) |
|                                          |                                     |   |               | (12,542  | )      |               |        | 6,361 |   |
|                                          |                                     |   |               |     |   |               |        |   |   |
| Loss Before Provision for                     |                                     |   |               |     |   |               |        |   |
|                                          | Income Taxes                             |   |               | (529,005 | )      |               |        | (121,010 | ) |
|                                          |                                     |   |               |     |   |               |        |   |   |
|                                          |                                     |   |               |     |   |               |        |   |   |
| Benefit(Provision) for Income Tax             |                                     |   | (19,458            | )        |   |               | (1,927      | ) |
|                                          |                                     |   |               |     |   |               |        |   |   |
|                                          |                                     |   |               |     |   |               |        |   |   |
| Net Loss                                      |                                     | $      | (548,463           | )        |   | $                  | (122,937    | ) |
|                                          |                                     |   |               |     |   |               |        |   |   |
|                                          |                                     |   |               |     |   |               |        |   |   |
|                                          |                                     |   |               |     |   |               |        |   |   |
|                                          |                                     |   |               |     |   |               |        |   |   |
| Loss Per Share                                |                                     |   |               |     |   |               |        |   |
|                                          | Basic and diluted                        |   | $                  | (0.00    | )      |               | $           | (0.00 | ) |
|                                          |                                     |   |               |     |   |               |        |   |   |
|                                          |                                     |   |               |     |   |               |        |   |   |
| Weighted Average Number of Shares Outstanding |                                     |   | 212,600,000        |     |   |               | 210,600,000 |   |
|                                          |                                     |   |               |     |   |               |        |   |   |

----

|                                                             |   |             |        |   |
|------------------------------------------------------------------|--------|------------------|-------------|--------|
|                                                             |   |             |        |   |   |   |
|                                                             |   | Six months ended |        |   | Six months ended |   |
|                                                             |   | June 30, 2010    |        |   | June 30, 2009 |   |
|                                                             |   | (Unaudited)      |        |   | (audited) |   |
| Operating revenues:                                              |   |             |        |   |   |   |
|                                                             |   |             |        |   |   |   |
|     Oil and gas production revenue           |   | $                | 201,432     |   |   | $ | 159,505 |   |
| Operating expenses:                                              |   |             |        |   |   |   |   |   |
|     Oil and gas production expense           |   |             | 610,808     |   |   |   | 93,087 |   |
|     Mineral extraction tax                   |   |             | 59,569      |   |   |   | 69,567 |   |
|     Depreciation, depletion and amortization |   |             | 139,607     |   |   |   | 148,510 |   |
|     Taxes other that income taxes            |   |             | 27,161      |   |   |   | 28,894 |   |
|     Marketing and transportation expenses    |   |             | 146,163     |   |   |   | 79,980 |   |
|     General and administrative               |   |             | 149,879     |   |   |   | 155,071 |   |
|                                                             |   |             | 1,133,187   |   |   |   | 575,109 |   |
|                                                             |   |             |        |   |   |   |   |   |
| Operating loss                                                   |   |             | (931,756    | )      |   |   | (415,604 | ) |
|                                                             |   |             |        |   |   |   |   |   |
| Other Income (Expense):                                          |   |             |        |   |   |   |   |   |
|     Currency translation gain/(loss)         |   |             | (8,790      | )      |   |   | (33,739 | )  |
|     Other Income                             |   |             | 43,409      |   |   |   | - |   |
|     Interest expense                         |   |             | (51,489     | )      |   |   | (22,881 | ) |
|                                                             |   |             | (16,870     | )      |   |   | (56,620 | ) |
|                                                             |   |             |        |   |   |   |   |   |
| Loss Before Provision for                                        |   |             |        |   |   |   |   |   |
| Income Taxes                                                     |   |             | (948,625    | )      |   |   | (472,224 | ) |
|                                                             |   |             |        |   |   |   |   |   |
|                                                             |   |             |        |   |   |   |   |   |
| Benefit(Provision) for Income Tax                                |   |             | (4,317      | )      |   |   | (23,831 | ) |
|                                                             |   |             |        |   |   |   |   |   |
| Net Loss                                                         |   | $                | (952,942    | )      |   | $ | (496,055 | ) |
|                                                             |   |             |        |   |   |   |   |   |
|                                                             |   |             |        |   |   |   |   |   |
| Loss Per Share                                                   |   |             |        |   |   |   |   |   |
| Basic and diluted                                                |   | $                | (0.00       | )      |   | $ | (0.00 | ) |
|                                                             |   |             |        |   |   |   |   |   |
| Weighted Average Number of Shares Outstanding                    |   |             | 212,600,000 |   |   |   | 210,600,000 |   |
|                                                             |   |             |        |   |   |   |   |   |

----

|                                        |   |          |       |   |   |            |        |   |   |      |
|---------------------------------------------|--------|---------------|------------|--------|--------|-----------------|-------------|--------|--------|-----------|
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   | Accumulated |   |   |   |   |
|                                        |   |          |       |   |   |            |        |   |   |      | Additional |   |   | Accumulated |   |   | Other |   |   |   |   |
|                                        |   | Comprehensive |       |   |   |            |        | Common |   |      | Paid-in |   |   | Deficit |   |   | Comprehensive |   |   |   |   |
|                                        |   | income/(loss) |       |   | Shares |            |        | Stock  |   |      | Capital |   |   |   |   |   | Income |   |   | Total |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |
| Balance at December31, 2009                 |   |          |       |   |   | 210,600,000     |        |   | $      | 21,060    |   |   | $ | 10,503,677 |   |   | $ | (7,392,870 | ) |   | $ | (334,162 | ) |   | $ | 2,797,705 |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for legal services      |   |          |       |   |   | 2,000,000  |        |   |   | 200  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 200 |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for six months ended June 30, 2010 |   | $             | (952,942   | )      |   |            |        |   |   |      |   |   |   |   |   |   |   |   | (952,942 | ) |   |   |   |   |   |   | (952,942 | ) |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment     |   |          | (67,968    | )      |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   | (67,968 | ) |   |   | (67,968 | ) |
|                                        |   | $             | (1,020,910 | )      |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at June 30, 2010                    |   |          |       |   |   |            | 212,600,000 |   |   | $         | 21,260 |   |   | $ | 10,503,677 |   |   | $ | (8,345,812 | ) |   | $ | (402,130 | ) |   | $ | 1,776,995 |   |
|                                        |   |          |       |   |   |            |        |   |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                |   | Six months ended |     |    | Six months ended |   |
|---------------------------------------------------------------------------------------------------------------------|--------|------------------|----------|---------|------------------|--------|
|                                                                                                                |   | June 30, 2010    |     |    | June 30, 2009    |   |
| Cash Flows from Operating Activities:                                                                               |   |             |     |    |             |   |
|                                                                                                                |   |             |     |    |             |   |
|        Net Loss                                                                  |   | $                | (952,942 | )       |             | $      | (495,874 | ) |
| Adjustments to reconcile net loss to cash                                                                           |   |             |     |    |             |   |   |   |
|           used in operating activities:                           |   |             |     |    |             |   |   |   |
|           Common stock issued for legal services                  |   |             | 200      |    |             |   | - |   |
|           Depreciation, depletion and amortization                |   |             | 139,607  |    |             |   | 148,541 |   |
|           Interest expense                                        |   |             | 25,153   |    |             |   | 22,881 |   |
|           Currency (gain)/loss                                    |   |             | 8,790    |    |             |   | - |   |
|           Deferred income taxes                                   |   |             | 4,317    |    |             |   | 30,540 |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
|        Changes in Assets and Liabilities:                                        |   |             |     |    |             |   |   |   |
|           Accounts Receivable and notes receivable                |   |             | (498     | )       |             |   | (24,971 | )  |
|           Inventories                                             |   |             | 91,417   |    |             |   | (12,417 | )  |
|           Prepaid expenses and taxes                              |   |             | 935      |    |             |   | 36,904 |   |
|           Prepaid and other assets                                |   |             | (2,898   | )       |             |   | (9,711 | ) |
|           Accounts Payable and accrued expenses                   |   |             | 406,020  |    |             |   | 147,364 |   |
|           Taxes payable                                           |   |             | 145,946  |    |             |   | 155,969 |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
|              Net Cash Used in Operating Activities |   |             | (133,953 | )       |             |   | (774 | ) |
|                                                                                                                |   |             |     |    |             |   |   |   |
| Cash Flows used in Investing activities:                                                                            |   |             |     |    |             |   |   |   |
|           Payments to Acquire Oil and Gas properties              |   |             | -        |    |             |   |   |   |
|           Payments to Acquire Property, Plant and Equipment       |   |             | (482     | )  |             |   | - |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
|     Net Cash Used in investing Activities                                                       |   |             | (482     | )       |             |   | - |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
| Cash Flows from Financing Activities:                                                                               |   |             |     |    |             |   |   |   |
|           Proceeds from sale of equity                            |   |             | -        |    |             |   |   |   |
|           Proceeds from Short-term Borrowings                     |   |             | 145,602  |    |             |   | 18,698 |   |
|           Proceeds from Long-term Borrowings                      |   |             | -        |    |             |   |   |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
|      Net Cash Provided from financing Activities                                           |   |             | 145,602  |    |             |   | 18,698 |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                                                        |   |             | (4       | )       |             |   | (17,662 | ) |
|                                                                                                                |   |             |     |    |             |   |   |   |
|        Net increase (decrease)  in cash                                |   |             | 11,163   |    |             |   | 262 |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
| Cash at beginning of period                                                                                         |   |             | 441      |    |             |   | 52 |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
| Cash at end of period                                                                                               |   | $                | 11,604   |    |             | $      | 314 |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
| Supplemental Disclosures of Cash Flow information:                                                                  |   |             |     |    |             |   |   |   |
|           Interest paid:                                          |   | $                | -        |    |             | $      | - |   |
|                                                                                                                |   |             |     |    |             |   |   |   |
|           Income Taxes paid                                       |   | $                | -        |    |             | $      | 2,191 |   |
|                                                                                                                |   |             |     |    |             |   |   |   |

----

----

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

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

----

----

| · | 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. |
|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | 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. |
|------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|                           |   | As of June 30, 2010(unaudited) |    |   | As of December 31, 2009 |   |
|--------------------------------|--------|--------------------------------|---------|--------|-------------------------|--------|
|                           |   |                           |    |   |                    |   |
| VAT receivable                 |   | $                              | 407,428 |   |                    | $      | 418,428 |   |
| Current Income Tax Receivables |   |                           | 3,878   |   |                    |   | 4,000 |   |
| Other taxes receivable         |   |                           | 4,127   |   |                    |   | 6,917 |   |
| Deferred expenses              |   |                           | 263     |   |                    |   | 450 |   |
|                           |   | $                              | 415,696 |   |                    | $      | 429,695 |   |

|                     |   | As of June 30, 2010(unaudited) |   |   | As of December 31, 2009 |    |
|--------------------------|--------|--------------------------------|--------|--------|-------------------------|---------|
|                     |   |                           |   |   |                    |    |
| Prepayments              |   |                           | 18,857 |   |                    |    | 18,204 |   |
| Loans to related parties |   |                           | -      |   |                    |    | - |   |
| Advances to Employees    |   |                           | 1,308  |   |                    |    | - |   |
|                     |   | $                              | 20,165 |   |                    | $  | 18,204  |   |

|                       |   | As of June 30, 2010(unaudited) |      |   | As of December 31, 2009 |   |
|----------------------------|--------|--------------------------------|-----------|--------|-------------------------|--------|
|                       |   |                           |      |   |                    |   |
| Trade accounts payable     |   | $                              | 816,022   |   |                    | $      | 502,530 |   |
| Wages and salaries payable |   |                           | 228,066   |   |                    |   | 135,423 |   |
| Interest payable           |   |                           | 25,315    |   |                    |   | - |   |
| Other accounts payable     |   |                           | 309       |   |                    |   | 48,208 |   |
|                       |   | $                              | 1,069,928 |   |                    | $      | 686,161 |   |

----

|                                                                                                           |   | As of June 30, 2010(unaudited) |    |   | As of December 31, 2009 |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------|--------|-------------------------|--------|
|                                                                                                           |   |                           |    |   |                    |   |
| Interest free, unsecured loans from RossGas, LLC a related party (debt is repayable on mutual consent)         |   | $                              | 141,944 |   |                    | $      | 118,667 |   |
| Interest free, unsecured loans from Vlasov N.V. a related party (debt is repayable on mutual consent)          |   |                           | 83,743  |   |                    |   | 84,314 |   |
| Interest free, unsecured loans from Galazov A.A. a related party (debt is repayable on mutual consent)         |   |                           | 133,158 |   |                    |   | 102,830 |   |
| 8%, Unsecured loans from Auxerre trading Ltd. a related party (debt is repayable on March 2, 2011)             |   |                           | 100,000 |   |                    |   | - |   |
| Interest free, unsecured loans from ZRV Consulting, Inc. a related party (debt is repayable on mutual consent) |   |                           | -       |   |                    |   | 2,350 |   |
| Interest free, unsecured loan from Tintrade Limited                                                            |   |                           | 200,000 |   |                    |   | 200,000 |   |
| Interest free, unsecured loans from members of staff                                                           |   |                           | 48      |   |                    |   | 14,683 |   |
|                                                                                                           |   | $                              | 656,892 |   |                    | $      | 522,844 |   |

|                              |   | GROSS ASSETS                   |   |   | GROSS LIABILITIES       |   |   | NET ASSETS                     |   |
|-----------------------------------|--------|--------------------------------|--------|--------|-------------------------|--------|--------|--------------------------------|--------|
|                              |   | As of June 30, 2010(unaudited) |   |   | As of December 31, 2009 |   |   | As of June 30, 2010(unaudited) |   |   | As of December 31, 2009 |   |   | As of June 30, 2010(unaudited) |   |   | As of December 31, 2009 |   |
|                              |   |                           |   |   |                    |   |   |                           |   |   |   |   |   |   |   |   |   |   |
| Property, plant and equipment     |   | $                              | 427    |   |                    | $      | 441    |                           |   | $ |   |   |   | $ | - |   |   | $ | 427 |   |   | $ | 441 |   |
| Proved Oil and Gas properties     |   |                           | 1,106  |   |                    |   | 15,013 |                           |   |   |   |   |   |   | - |   |   |   | 1,106 |   |   |   | 15,013 |   |
| Inventories                       |   |                           | 22,950 |   |                    |   | 19,726 |                           |   |   |   |   |   |   | - |   |   |   | 22,950 |   |   |   | 19,726 |   |
| Accounts payable                  |   |                           | 1,212  |   |                    |   | 1,250  |                           |   |   |   |   |   |   | - |   |   |   | 1,212 |   |   |   | 1,250 |   |
| Assets retirement obligations     |   |                           | 41,072 |   |                    |   | 37,363 |                           |   |   |   |   |   |   | - |   |   |   | 41,072 |   |   |   | 37,363 |   |
| Prepaid and other assets          |   |                           | 420    |   |                    |   | -      |                           |   |   |   |   |   |   |   |   |   |   | 420 |   |   |   | - |   |
| Borrowings                        |   |                           | -      |   |                    |   | -      |                           |   |   | (9,298 | ) |   |   | (9,590 | ) |   |   | (9,298 | ) |   |   | (9,590 | ) |
| Deferred tax assets/(liabilities) |   | $                              | 67,187 |   |                    | $      | 73,793 |                           |   | $ | (9,298 | ) |   | $ | (9,590 | ) |   | $ | 57,889 |   |   | $ | 64,203 |   |

----

|                                  |   | As of June 30, 2010(unaudited) |    |   | As of December 31, 2009 |   |
|---------------------------------------|--------|--------------------------------|---------|--------|-------------------------|--------|
|                                  |   |                           |    |   |                    |   |
| Beginning asset retirement obligation |   | $                              | 600,115 |   |                    | $      | 566,279 |   |
| Liabilities incurred                  |   |                           | -       |   |                    |   | - |   |
| Liabilities settled                   |   |                           | -       |   |                    |   | - |   |
| Accretion expense                     |   |                           | 25,153  |   |                    |   | 13,944 |   |
| Revision to estimated cash flows      |   |                           | -       |   |                    |   | - |   |
| Foreign currency translation          |   |                           | (19,209 | )      |                    |   | 22,962 | ) |
| Ending asset retirement obligation    |   | $                              | 606,059 |   |                    | $      | 600,115 |   |

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

----

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

----

----

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

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

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

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

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

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

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

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

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

----

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

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

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

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

----

|                                                 |   | For three months ended June 30, |   |
|------------------------------------------------------|--------|---------------------------------|--------|
|                                                 |   | 2010                            |   |   | 2009 |   |
|                                                 |   |                            |   |   |   |   |
| Oil revenue                                          |   | $                               | 93,170 |   |   | $ | 91,089 |   |
|                                                 |   |                            |   |   |   |   |   |   |
| Net Oil sold (Bbls)                                  |   |                            | 3,684  |   |   |   | 4,377 |   |
| Average price of oil sold (per bbl)                  |   | $                               | 25.29  |   |   | $ | 20.81 |   |
| Average production and transportation cost (per bbl) |   | $                               | 119.31 |   |   | $ | 26.77 |   |

|                                                 |   | For six months ended June 30, |    |
|------------------------------------------------------|--------|-------------------------------|---------|
|                                                 |   | 2010                          |    |   | 2009 |   |
|                                                 |   |                          |    |   |   |   |
| Oil revenue                                          |   | $                             | 201,432 |   |   | $ | 159,505 |   |
|                                                 |   |                          |    |   |   |   |   |   |
| Net Oil sold (Bbls)                                  |   |                          | 8,771   |   |   |   | 11,324 |   |
| Average price of oil sold (per bbl)                  |   | $                             | 22.97   |   |   | $ | 14.09 |   |
| Average production and transportation cost (per bbl) |   | $                             | 93.10   |   |   | $ | 21.43 |   |

----

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

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

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

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

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

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

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

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

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

----

----

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

| 31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of theSarbanes-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 |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                   | PREMIER ENERGY CORP. |                                                                                |
|------------------------|----------------------|-------------------------------------------------------------------------------------|
|                   |                 |                                                                                |   |
| Dated: August 23, 2010 | By:                  | /s/ Anton Prodonavic                                                           |   |
|                   |                 | Anton Prodonavic, Chief Executive Officer and Director(Principal Executive Officer) |   |
|                   |                 |                                                                                |   |
|                   |                 |                                                                                |   |

|   |   |                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                          |   |
|   | By:    | /s/ Alexey Goleshev                                                                                      |   |
|   |   | Alexey Goleshev, Chief Financial Officer and Director(Principal Financial and Accounting Officer)   |   |
|   |   |                                                                                                          |   |
|   |   |                                                                                                          |   |