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 six-month period ended June 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 six months ended June 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 six-month periods ended June 30, 2009 and 2008.

COMPARISON OF THREE MONTHS ENDED JUNE 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 June 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 June 30, 2009 decreased 73% to $0.09 million from $0.34 million in the comparable period in 2008.

• Gross profit margin decreased 89.3% points for the three months ended June 30, 2009 to 16.9% from 42.2% in the comparable period in 2008, primarily resulting from lower sales.

• Selling, general and administrative expenses as a percentage of revenue were 11.9% and 15.3% for the three months ended June 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 down by 47%, value falling from $0.08 million at the three month period ended June 30, 2008 to $0.04 million at June 30, 2009.

COMPARISON OF SIX MONTHS ENDED JUNE 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 six months ended June 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 six months ended June 30, 2009 decreased 66% to $0.16 million from $0.47 million in the comparable period in 2008.

• Deterioration in current ratio (defined as current assets divided by current liabilities) of 64.35% at June 30, 2009 as compared to 86.73% at December 31, 2008.

• Gross profit margin increased 57.2% points for the six months ended June 30, 2009 to (1.97)% from (4.60)% in the comparable period in 2008, primarily resulting from a effective costs management.

• Selling, general and administrative expenses as a percentage of revenue were 97.2% and 18.8% for the six months ended June 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 58%, value falling from $0.19 million at the six month period ended June, 2008 to $0.08million at June 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 Note Summary 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
New Accounting Standards

In December 2007, the FASB issued SFAS No. 141R, Business Combinations ("SFAS 141R"), which replaces SFAS No. 141. This statement retains the purchase method of accounting for acquisitions but establishes principles and requirements for how an acquirer entity recognizes and measures in its financial statements the identifiable assets acquired (including intangibles), the liabilities assumed and any non-controlling interests in the acquired entity. This statement also changes the recognition of assets acquired and liabilities assumed arising from contingencies and requires the expensing of acquisition-related costs as incurred. We adopted SFAS 141R on January 1, 2009, which did not have any impact on our consolidated financial statements upon adoption. However, we expect that SFAS 141R will have an impact on our future consolidated financial statements, but the nature and magnitude of the specific effects will depend upon the nature of any future transactions.

In April 2009, the FASB issued FSP No. 141R-1 Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies ("FSP 141R-1"). FSP 141R-1 amends the provisions in SFAS 141R for the initial recognition and measurement, subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. FSP 141R-1 eliminates the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria in SFAS 141R and instead carries forward most of the provisions in SFAS 141 for acquired contingencies. FSP 141R-1 is effective for contingent assets and contingent liabilities acquired in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We expect that FSP 141R-1 will have an impact on our future consolidated financial statements, but the nature and magnitude of the specific effects will depend upon the nature, term and size of any acquired contingencies.

In April 2008, the FASB issued FSP No. 142-3, Determination of the Useful Life of Intangible Assets ("FSP 142-3"). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets, and requires enhanced disclosures relating to: (a) the entity's accounting policy on the treatment of costs incurred to renew or extend the term of a recognized intangible asset; (b) in the period of acquisition or renewal, the weighted-average period prior to the next renewal or extension (both explicit and implicit), by major intangible asset class; and
(c) for an entity that capitalizes renewal or extension costs, the total amount of costs incurred in the period to renew or extend the term of a recognized intangible asset for each period for which a statement of financial position is presented, by major intangible asset class. FSP 142-3 must be applied prospectively to all intangible assets acquired as of and subsequent to fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.

International Financial Reporting Standards ("IFRS") are a set of standards and interpretations adopted by the International Accounting Standards Board. The SEC is currently considering a potential IFRS adoption process in the U.S., which could, in the near term, provide domestic issuers with an alternative accounting method and ultimately could replace U.S. GAAP reporting requirements with IFRS reporting requirements. It is anticipated that the SEC will soon issue guidance on this potential adoption. We are currently investigating the implications to the Company should we be required to adopt IFRS.

 RESULTS OF OPERATIONS

Three Months Ended June, 2009 and 2008

The following summarizes our operational highlights during three months ended
June 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 for three months ended June 30, 2009 and June 30, 2008 (in US
Dollars):

                                                               For three months ended June 30,
                                                                    2009               2008

Oil revenue                                                    $       91,089       $  342,029

Net Oil sold (Bbls)                                                     4,377            7,585
Average price of oil sold (per bbl)                            $        20.81       $    45.09
Average production and transportation cost (per bbl)           $        26.77       $    36.48

During three months ended June 30, 2009, the Company's domestic oil revenues were down by 73%, due to decreased oil production by 17.1% and decrease of selling price by 53.8%.

The Company's domestic oil operating expenses decreased 51.8%, value falling from $0.45 million at the prior the three month period ended June 30, 2008 to $0.22 million at June 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 June 30, 2009 resulted in lower costs per bbl.

Six Months Ended June, 2009 and 2008

The following summarizes our operational highlights during six months ended June
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 for six months ended June 30, 2009 and June 30, 2008 (in US
Dollars):

                                                           For six months ended June 30,
                                                            2009                  2008

Oil revenue                                            $       159,505       $       471,538

Net Oil sold (Bbls)                                             11,324                11,849
Average price of oil sold (per bbl)                    $         14.09       $         39.79
Average production and transportation cost (per bbl)   $         21.43       $         57.87

During six months ended June 30, 2009, the Company's domestic oil revenues were down by 66%, due to decreased oil production by 18% and decrease of selling price by 65%.

The Company's domestic oil operating expenses decreased 44.5%, value falling from $1.04 million at the prior the six month period ended June 30, 2008 to $0.58 million at June 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 six months ended June 30, 2009 resulted in lower costs per bbl.

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

Since June 30, 2009 there have been no significant material developments.

Results of Operations achieved during three months ended June 30, 2009 Compared to three months ended June 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 June 30, 2009 of $0.122 million compared to a net loss of $0.118 million for the same period in 2008. Factors contributing to the $0.004 million decrease in net loss from three months ended June 30, 2008 to three months ended June 30, 2009 included the following:

· Oil production net of our interest for three months ended June 30, 2009 was 4,677 Bbls resulting in $91,089 worth of oil sales, at an average wellhead price of $20.81 per Bbls for the three months ended June 30, 2009.
· In 2008, our net production was 5,629 Bbls resulting in $342,029 worth of oil sales, at an average wellhead price of $45.09.

· The 17.1% 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 June 30, 2009 decreased to $81,916 (59% over three months ended June 30, 2008).

General and administrative expenses decreased from $52,477 for the three months ended June 30, 2008 to $10,825 for the three months ended June 30, 2009, due largely to:

· Decease 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 six months ended June 30, 2009 Compared to six months ended June 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 six months ended June 30, 2009 of $0.49 million compared to a net loss of $0.51 million for the same period in 2008. Factors contributing to the $0.02 million decrease in net loss from six months ended June 30, 2008 to six months ended June 30, 2009 included the following:

· Oil production net of our interest for six months ended June 30, 2009 was 9,866 Bbls resulting in $159,505 worth of oil sales, at an average wellhead price of $14.09 per Bbls for the six months ended June 30, 2009.
· In 2008, our net production was 12,084 Bbls resulting in $471,538 worth of oil sales, at an average wellhead price of $39.79.

· The 18.4% 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 six months ended June 30, 2009 decreased to $149,547 (68% over six months ended June 30, 2008).

General and administrative expenses increased from $88,599 for the six months ended June 30, 2008 to $155,071 for the six months ended June 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 of Additional 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

Unless we receive an imminent infusion of cash either through the sale of equity or debt, we will not be adequately capitalized. There is no guarantee that we will be able to obtain funding or if we do obtain funding that will be on adequate terms to meet our drilling commitments and expected general and administrative expenses for the next twelve months. 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.

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.