----

----

| Nevada(State      or other jurisdiction of incorporation or organization) | 91-1918324(I.R.S.      EmployerIdentification      No.) |
|---------------------------------------------------------------------------|---------------------------------------------------------|

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

----

| Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | Page      No. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
| FINANCIAL      INFORMATION:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |          |
|  Unaudited      Condensed Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
|  Condensed      Consolidated Balance Sheets at June 30, 2008 and December 31,      2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  F-1     |
|  Condensed      Consolidated Statement of Operations for the Three and Six Months Ended      June 30, 2008 and 2007 and for the Period From Inception, May 25, 2004 to      June 30, 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  F-2     |
|  Consolidated      Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007      and for the Period From Inception, May 25, 2004 to June 30,      2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  F-3     |
|  Condensed      Consolidated Statement of Shareholders’ Equity/(Deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  F-4     |
|  Notes      to Condensed Consolidated Financial      Statements                                                                                                                                   |  F-5     |

----

| MANAS      PETROLEUM CORPORATION                                                                                                                      |   |   |        |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| (A      DEVELOPMENT STAGE COMPANY)                                                                                                                    |   |   |        |   |   |   |
| CONDENSED      CONSOLIDATED FINANCIAL STATEMENTS                                                                                                      |   |   |        |   |
| UNAUDITED                                                                                                                                             |   |   |        |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |
| CONDENSED      CONSOLIDATED BALANCE SHEETS                                                                                                            |   |   |        |   |
|                                                                                                                                                  |   |   |        |   |   |   |
|                                                                                                                                                  |   |   | 06.30.2008  |   |   |   | 12.31.2007 |   |
|                                                                                                                                                  |   | USD    |        |   | USD    |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| ASSETS                                                                                                                                                |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Cash      and cash equivalents                                                                                                                        |   |   | 1,608,927   |   |   |   | 8,480,771 |   |
| Restricted      cash                                                                                                                                  |   |   | 6,180,000   |   |   |   | - |   |
| Accounts      receivable                                                                                                                              |   |   | 269,354     |   |   |   | 148,346 |   |
| Prepaid      expenses                                                                                                                                 |   |   | 586,211     |   |   |   | 125,923 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total      current assets                                                                                                                             |   |   | 8,644,492   |   |   |   | 8,755,040 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Debt      issuance costs                                                                                                                              |   |   | 192,500     |   |   |   | - |   |
| Tangible      fixed assets                                                                                                                            |   |   | 221,301     |   |   |   | 153,074 |   |
| Investment      in associate                                                                                                                          |   |   | 238,304     |   |   |   | 238,304 |   |
| Other      non-current assets                                                                                                                         |   |   | 62,279      |   |   |   | 62,279 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total      non-current assets                                                                                                                         |   |   | 714,384     |   |   |   | 453,657 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| TOTAL      ASSETS                                                                                                                                     |   |   | 9,358,875   |   |   |   | 9,208,697 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS' EQUITY                                                                                                             |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Bank      overdraft                                                                                                                                   |   |   | -           |   |   |   | 2,305 |   |
| Accounts      payable                                                                                                                                 |   |   | 774,830     |   |   |   | 110,156 |   |
| Accrued      expenses Albania fees                                                                                                                    |   |   | -           |   |   |   | 400,000 |   |
| Accrued      expenses VAT                                                                                                                             |   |   | 366,139     |   |   |   | 264,984 |   |
| Accrued      expenses Professional fees                                                                                                               |   |   | 79,641      |   |   |   | 408,862 |   |
| Accrued      expenses Commissions                                                                                                                     |   |   | 70,000      |   |   |   | - |   |
| Other      accrued expenses                                                                                                                           |   |   | 258,904     |   |   |   | 168,192 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total      current liabilities                                                                                                                        |   |   | 1,549,514   |   |   |   | 1,354,499 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Loan      owed to a shareholder                                                                                                                       |   |   | -           |   |   |   | 39,329 |   |
| Debentures                                                                                                                                            |   |   | 3,760,000   |   |   |   | - |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total      non-current liabilities                                                                                                                    |   |   | 3,760,000   |   |   |   | 39,329 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| TOTAL      LIABILITIES                                                                                                                                |   |   | 5,309,514   |   |   |   | 1,393,828 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Common      stock (300,000,000 shares authorized, USD 0.001 par value, 113,570,122 and      112,156,488 shares, respectively, issued and outstanding) |   |   | 113,570     |   |   |   | 112,156 |   |
| Additional      paid-in capital                                                                                                                       |   |   | 28,698,888  |   |   |   | 21,550,636 |   |
| Deficit      accumulated during the development stage                                                                                                 |   |   | (24,819,502 | )      |   |   | (13,904,456 | ) |
| Accumulated      other comprehensive income                                                                                                           |   |   | 56,404      |   |   |   | 56,533 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total      shareholders' equity                                                                                                                       |   |   | 4,049,361   |   |   |   | 7,814,870 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| TOTAL      LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                       |   |   | 9,358,875   |   |   |   | 9,208,697 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |

----

| MANAS      PETROLEUM CORPORATION                           |   |                            |        |   |                          |   |        |             |   |   |        |   |
|------------------------------------------------------------|--------|---------------------------------|-------------|--------|-------------------------------|--------|-------------|------------------|--------|--------|-------------|--------|
| (A      DEVELOPMENT STAGE COMPANY)                         |   |                            |        |   |                          |   |        |             |   |   |
| CONDENSED      CONSOLIDATED FINANCIAL STATEMENTS           |   |                            |        |   |                          |   |        |
| UNAUDITED                                                  |   |                            |        |   |                          |   |        |             |   |   |        |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |
| CONDENSED      CONSOLIDATED STATEMENTS OF OPERATIONS       |   |                            |        |   |                          |   |        |             |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |
|                                                       |   | For      the three months ended |        |   | For      the six months ended |   |        | Period      from |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   | 05.25.2004 |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   | (Inception)      to |   |
|                                                       |   |                            | 06.30.2008  |   |                          |   | 06.30.2007  |             |   |   | 06.30.2008  |   |   |   | 06.30.2007 |   |   |   | 06.30.2008 |   |
|                                                       |   | USD                             |        |   | USD                           |   |        |             |   |   |        |   |   |   |   | USD |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| OPERATING      REVENUES                                    |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Other      revenues                                        |   |                            | 593,196     |   |                          |   | -           |             |   |   | 593,196     |   |   |   | - |   |   |   | 1,333,605 |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Total      revenues                                        |   |                            | 593,196     |   |                          |   | -           |             |   |   | 593,196     |   |   |   | - |   |   |   | 1,333,605 |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| OPERATING      EXPENSES                                    |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Personnel      costs                                       |   |                            | (2,491,243  | )      |                          |   | (1,679,208  | )                |   |   | (5,056,900  | )      |   |   | (1,696,219 | ) |   |   | (11,051,035 | ) |
| Exploration      costs                                     |   |                            | (1,026,399  | )      |                          |   | -           |             |   |   | (1,288,011  | )      |   |   | (45,901 | ) |   |   | (2,662,993 | ) |
| Depreciation                                               |   |                            | (12,153     | )      |                          |   | (3,547      | )                |   |   | (21,837     | )      |   |   | (3,808 | ) |   |   | (68,469 | ) |
| Consulting      fees                                       |   |                            | (385,952    | )      |                          |   | (224,368    | )                |   |   | (3,197,222  | )      |   |   | (422,201 | ) |   |   | (6,929,301 | ) |
| Administrative      costs                                  |   |                            | (818,864    | )      |                          |   | (3,217,783  | )                |   |   | (1,441,810  | )      |   |   | (3,389,772 | ) |   |   | (8,934,369 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Total      operating expenses                              |   |                            | (4,734,611  | )      |                          |   | (5,124,906  | )                |   |   | (11,005,781 | )      |   |   | (5,557,902 | ) |   |   | (29,646,167 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Gain      from sale of investment                          |   |                            | -           |   |                          |   | -           |             |   |   | -           |   |   |   | - |   |   |   | 3,864,197 |   |
| Loss      from sale of investment                          |   |                            | -           |   |                          |   | (900        | )                |   |   | -           |   |   |   | (900 | ) |   |   | (900 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| OPERATING      LOSS                                        |   |                            | (4,141,415  | )      |                          |   | (5,125,806  | )                |   |   | (10,412,585 | )      |   |   | (5,558,802 | ) |   |   | (24,449,265 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| NON-OPERATING      INCOME / (EXPENSE)                      |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Exchange      differences                                  |   |                            | (2,380      | )      |                          |   | (27,599     | )                |   |   | 59,558      |   |   |   | (27,020 | ) |   |   | (29,386 | ) |
| Interest      income                                       |   |                            | 25,100      |   |                          |   | 96,081      |             |   |   | 74,351      |   |   |   | 101,637 |   |   |   | 417,701 |   |
| Interest      expense                                      |   |                            | (632,906    | )      |                          |   | (2,626      | )                |   |   | (635,591    | )      |   |   | (4,775 | ) |   |   | (717,231 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Loss      before taxes and equity in net loss of associate |   |                            | (4,751,600  | )      |                          |   | (5,059,949  | )                |   |   | (10,914,268 | )      |   |   | (5,488,960 | ) |   |   | (24,778,180 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Taxes                                                      |   |                            | 160         |   |                          |   | (351        | )                |   |   | (777        | )      |   |   | (324 | ) |   |   | (2,451 | ) |
| Equity      in net loss of associate                       |   |                            | -           |   |                          |   | -           |             |   |   | -           |   |   |   | - |   |   |   | (24,523 | ) |
| Minority      interest in net income                       |   |                            | -           |   |                          |   | -           |             |   |   | -           |   |   |   | - |   |   |   | (18,700 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Net      loss                                              |   |                            | (4,751,440  | )      |                          |   | (5,060,300  | )                |   |   | (10,915,045 | )      |   |   | (5,489,284 | ) |   |   | (24,823,854 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Weighted      average number of outstanding shares         |   |                            | 113,539,840 |   |                          |   | 110,150,648 |             |   |   | 113,058,917 |   |   |   | 105,130,524 |   |   |   | 103,752,363 |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |
| Basic      and diluted loss per share                      |   |                            | (0.04       | )      |                          |   | (0.05       | )                |   |   | (0.10       | )      |   |   | (0.05 | ) |   |   | (0.24 | ) |
|                                                       |   |                            |        |   |                          |   |        |             |   |   |        |   |   |   |   |   |   |   |   |   |

----

| MANAS      PETROLEUM CORPORATION                                         |   |                          |        |   |             |   |       |                |       |
|--------------------------------------------------------------------------|--------|-------------------------------|-------------|--------|------------------|--------|------------|---------------------|------------|
| (A      DEVELOPMENT STAGE COMPANY)                                       |   |                          |        |   |             |   |       |                |       |
| CONDENSED      CONSOLIDATED FINANCIAL STATEMENTS                         |   |                          |        |   |             |   |       |                |       |
| UNAUDITED                                                                |   |                          |        |   |             |   |       |                |       |
|                                                                     |   |                          |        |   |             |   |       |                |       |
|                                                                     |   |                          |        |   |             |   |       |                |       |
| CONDENSED      CONSOLIDATED CASH FLOW STATEMENT                          |   |                          |        |   |             |   |       |                |       |
|                                                                     |   |                          |        |   |             |   |       |                |       |
|                                                                     |   | For      the six months ended |        |   | Period      from |   |
|                                                                     |   |                          |        |   |             |   |       |                | 05.25.2004 |   |
|                                                                     |   |                          |        |   |             |   |       | (Inception)      to |       |
|                                                                     |   |                          | 06.30.2008  |   |             |   | 06.30.2007 |                |       |   | 06.30.2008 |   |
|                                                                     |   | USD                           |        |   | USD              |   |       | USD                 |       |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| OPERATING      ACTIVITIES                                                |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Net      loss for the period                                             |   |                          | (10,915,045 | )      |             |   | (5,489,284 | )                   |       |   | (24,823,854 | ) |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| To      reconcile net loss to net cash used                              |   |                          |        |   |             |   |       |                |       |   |   |   |
| in      operating activities                                             |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Minority      interest in net income                                     |   |                          | -           |   |             |   | -          |                |       |   | 18,700 |   |
| Gain      from sale of investment                                        |   |                          | -           |   |             |   | -          |                |       |   | (3,864,197 | ) |
| Loss      from sale of investment                                        |   |                          | -           |   |             |   | 900        |                |       |   | 900 |   |
| Equity      in net loss of associate                                     |   |                          | -           |   |             |   | -          |                |       |   | 24,523 |   |
| Depreciation                                                             |   |                          | 21,837      |   |             |   | 3,808      |                |       |   | 68,469 |   |
| Amortization      of debt issuance costs                                 |   |                          | 17,500      |   |             |   | -          |                |       |   | 17,500 |   |
| Exchange      differences                                                |   |                          | (59,558     | )      |             |   | 27,020     |                |       |   | 29,386 |   |
| Interest      expense on debentures                                      |   |                          | 557,989     |   |             |   | -          |                |       |   | 557,989 |   |
| Decrease      / (increase) in receivables                                |   |                          | (640,046    | )      |             |   | 16,207     |                |       |   | (909,121 | ) |
| Decrease      / (increase) in other non-current assets                   |   |                          | -           |   |             |   | -          |                |       |   | (62,279 | ) |
| (Decrease)      / increase in accounts payables                          |   |                          | 664,675     |   |             |   | (480,831   | )                   |       |   | 238,509 |   |
| (Decrease)      / increase in accrued expenses                           |   |                          | (478,604    | )      |             |   | 73,196     |                |       |   | 692,012 |   |
| Stock-based      compensation                                            |   |                          | 6,351,677   |   |             |   | 3,911,957  |                |       |   | 13,596,966 |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Cash      flow from operating activities                                 |   |                          | (4,479,575  | )      |             |   | (1,937,027 | )                   |       |   | (14,414,497 | ) |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| INVESTING      ACTIVITIES                                                |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Purchase      of tangible fixed assets and computer software             |   |                          | (90,064     | )      |             |   | (53,049    | )                   |       |   | (368,812 | ) |
| Sale      of tangible fixed assets and computer software                 |   |                          | -           |   |             |   | -          |                |       |   | 79,326 |   |
| Proceeds      from sale of investment                                    |   |                          | -           |   |             |   | -          |                |       |   | 4,000,000 |   |
| Restricted      cash                                                     |   |                          | (6,180,000  | )      |             |   | -          |                |       |   | (6,180,000 | ) |
| Acquisition      of investment in associate                              |   |                          | -           |   |             |   | -          |                |       |   | (67,747 | ) |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Cash      flow from investing activities                                 |   |                          | (6,270,064  | )      |             |   | (53,049    | )                   |       |   | (2,537,233 | ) |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| FINANCING      ACTIVITIES                                                |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Contribution      share capital founders                                 |   |                          | -           |   |             |   | -          |                |       |   | 80,019 |   |
| Issuance      of units                                                   |   |                          | -           |   |             |   | 9,685,997  |                |       |   | 13,208,055 |   |
| Issuance      of debentures                                              |   |                          | 3,760,000   |   |             |   | -          |                |       |   | 3,760,000 |   |
| Issuance      of warrants                                                |   |                          | 240,000     |   |             |   | -          |                |       |   | 240,000 |   |
| Cash      arising on recapitalization                                    |   |                          | -           |   |             |   | 6,510      |                |       |   | 6,510 |   |
| Shareholder      loan repaid                                             |   |                          | (39,329     | )      |             |   | (208,462   | )                   |       |   | (3,385,832 | ) |
| Shareholder      loan raised                                             |   |                          | -           |   |             |   | -          |                |       |   | 4,653,720 |   |
| Payment      of debt issuance costs                                      |   |                          | (140,000    | )      |             |   | -          |                |       |   | (140,000 | ) |
| (Decrease)      / increase in bank overdraft                             |   |                          | (2,305      | )      |             |   | (19,003    | )                   |       |   | - |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Cash      flows from financing activities                                |   |                          | 3,818,366   |   |             |   | 9,465,042  |                |       |   | 18,422,472 |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Net      change in cash and cash equivalents                             |   |                          | (6,931,273  | )      |             |   | 7,474,966  |                |       |   | 1,470,742 |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Cash      and cash equivalents at the beginning of the period            |   |                          | 8,480,771   |   |             |   | 1,090,098  |                |       |   | - |   |
| Currency      translation effect on cash and cash equivalents            |   |                          | 59,429      |   |             |   | (27,579    | )                   |       |   | 138,185 |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Cash      and cash equivalents at the end of the period                  |   |                          | 1,608,927   |   |             |   | 8,537,485  |                |       |   | 1,608,927 |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Supplement      schedule of non-cash investing and financing activities: |   |                          |        |   |             |   |       |                |       |   |   |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |
| Forgiveness      of debt by major shareholder                            |   |                          | -           |   |             |   | -          |                |       |   | 1,466,052 |   |
| Deferred      consideration for interest in CJSC South Petroleum Co.     |   |                          | -           |   |             |   | -          |                |       |   | 193,003 |   |
| Warrants      issued to pay placement commission expenses                |   |                          | -           |   |             |   | 2,689,910  |                |       |   | 2,689,910 |   |
| Debenture      interest paid in common shares                            |   |                          | 57,449      |   |             |   | -          |                |       |   | 57,449 |   |
|                                                                     |   |                          |        |   |             |   |       |                |       |   |   |   |

----

| MANAS      PETROLEUM CORPORATION                                          |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |
|---------------------------------------------------------------------------|--------|-----------------------|-------------|--------|--------------------|--------|---------|---------------------------------|--------|--------|-------------------------------------------------------|--------|--------|-----------------------------------------------------|-------------|--------|----------------------------------------------|--------|---------|
| (A      DEVELOPMENT STAGE COMPANY)                                        |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |
| CONDENSED      CONSOLIDATED FINANCIAL STATEMENTS                          |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |
| UNAUDITED                                                                 |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |
| CONDENSED      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY /(DEFICIT) |   |                  |        |   |               |   |    |                            |   |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |
|  SHAREHOLDERS'      EQUITY / (DEFICIT)                               |   | Number      of Shares |        |   | Share      Capital |   |    | Additional      paid-in capital |   |   | Deficit      accumulated during the development stage |   |   | Accumulated      Other Compre-hensive Income (Loss) |        |   | Total      share-holders' equity / (deficit) |   |    |  Comprehensive      Income (Loss) |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |
| Balance      May 25, 2004                                                 |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | -           |   |                                         |   | -       |   |   |   | - |   |   |   | - |   |
| Contribution      share capital from founders                             |   |                  | 80,000,000  |   |               |   | 80,000  |                            |   |   | 19                                                    |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 80,019 |   |   |   | - |   |
| Currency      translation adjustment                                      |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | -           |   |                                         |   | (77,082 | ) |   |   | (77,082 | ) |   |   | (77,082 | ) |
| Net      loss for the period                                              |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | (601,032    | )      |                                         |   | -       |   |   |   | (601,032 | ) |   |   | (601,032 | ) |
| Balance      December 31, 2004                                            |   |                  | 80,000,000  |   |               |   | 80,000  |                            |   |   | 19                                                    |   |   |                                                | (601,032    | )      |                                         |   | (77,082 | ) |   |   | (598,095 | ) |   |   | (678,114 | ) |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
| Balance      January 1, 2005                                              |   |                  | 80,000,000  |   |               |   | 80,000  |                            |   |   | 19                                                    |   |   |                                                | (601,032    | )      |                                         |   | (77,082 | ) |   |   | (598,095 | ) |   |   |   |   |
| Currency      translation adjustment                                      |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                |        |   |                                         |   | 218,699 |   |   |   | 218,699 |   |   |   | 218,699 |   |
| Net      loss for the year                                                |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | (1,993,932  | )      |                                         |   | -       |   |   |   | (1,993,932 | ) |   |   | (1,993,932 | ) |
| Balance      December 31, 2005                                            |   |                  | 80,000,000  |   |               |   | 80,000  |                            |   |   | 19                                                    |   |   |                                                | (2,594,964  | )      |                                         |   | 141,617 |   |   |   | (2,373,328 | ) |   |   | (1,775,233 | ) |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
| Balance      January 1, 2006                                              |   |                  | 80,000,000  |   |               |   | 80,000  |                            |   |   | 19                                                    |   |   |                                                | (2,594,964  | )      |                                         |   | 141,617 |   |   |   | (2,373,328 | ) |   |   |   |   |
| Forgiveness      of debt by major shareholder                             |   |                  | -           |   |               |   | -       |                            |   |   | 1,466,052                                             |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 1,466,052 |   |   |   | - |   |
| Currency      translation adjustment                                      |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | -           |   |                                         |   | (88,153 | ) |   |   | (88,153 | ) |   |   | (88,153 | ) |
| Net      income for the year                                              |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | 1,516,004   |   |                                         |   | -       |   |   |   | 1,516,004 |   |   |   | 1,516,004 |   |
| Balance      December 31, 2006                                            |   |                  | 80,000,000  |   |               |   | 80,000  |                            |   |   | 1,466,071                                             |   |   |                                                | (1,078,960  | )      |                                         |   | 53,464  |   |   |   | 520,575 |   |   |   | 1,427,851 |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
| Balance      January 1, 2007                                              |   |                  | 80,000,000  |   |               |   | 80,000  |                            |   |   | 1,466,071                                             |   |   |                                                | (1,078,960  | )      |                                         |   | 53,464  |   |   |   | 520,575 |   |   |   |   |   |
| Recapitalization      transaction (Note 1)                                |   |                  | 20,110,400  |   |               |   | 20,110  |                            |   |   | (356,732                                              | )      |   |                                                | -           |   |                                         |   | -       |   |   |   | (336,622 | ) |   |   | - |   |
| Stock-based      compensation                                             |   |                  | 880,000     |   |               |   | 880     |                            |   |   | 7,244,409                                             |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 7,245,289 |   |   |   | - |   |
| Private      placement of Units, issued for cash                          |   |                  | 10,330,152  |   |               |   | 10,330  |                            |   |   | 9,675,667                                             |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 9,685,997 |   |   |   | - |   |
| Private      placement of Units                                           |   |                  | 10,709      |   |               |   | 11      |                            |   |   | (11                                                   | )      |   |                                                | -           |   |                                         |   | -       |   |   |   | - |   |   |   | - |   |
| Private      placement of Units, issued for cash                          |   |                  | 825,227     |   |               |   | 825     |                            |   |   | 3,521,232                                             |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 3,522,057 |   |   |   | - |   |
| Currency      translation adjustment                                      |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | -           |   |                                         |   | 3,069   |   |   |   | 3,069 |   |   |   | 3,069 |   |
| Net      loss for the year                                                |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | (12,825,496 | )      |                                         |   | -       |   |   |   | (12,825,496 | ) |   |   | (12,825,496 | ) |
| Balance      December 31, 2007                                            |   |                  | 112,156,488 |   |               |   | 112,156 |                            |   |   | 21,550,636                                            |   |   |                                                | (13,904,456 | )      |                                         |   | 56,533  |   |   |   | 7,814,870 |   |   |   | (12,822,427 | ) |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
| Balance      January 1, 2008                                              |   |                  | 112,156,488 |   |               |   | 112,156 |                            |   |   | 21,550,636                                            |   |   |                                                | (13,904,456 | )      |                                         |   | 56,533  |   |   |   | 7,814,870 |   |   |   |   |   |
| Stock-based      compensation                                             |   |                  | 1,369,893   |   |               |   | 1,370   |                            |   |   | 4,536,211                                             |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 4,537,580 |   |   |   | - |   |
| Currency      translation adjustment                                      |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | -           |   |                                         |   | 1,621   |   |   |   | 1,621 |   |   |   | 1,621 |   |
| Net      loss for the period                                              |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | (6,163,605  | )      |                                         |   | -       |   |   |   | (6,163,605 | ) |   |   | (6,163,605 | ) |
| Balance      March 31, 2008                                               |   |                  | 113,526,381 |   |               |   | 113,526 |                            |   |   | 26,086,846                                            |   |   |                                                | (20,068,062 | )      |                                         |   | 58,154  |   |   |   | 6,190,466 |   |   |   | (6,161,984 | ) |
|                                                                      |   |                  |        |   |               |   |    |                            |   |   |                                                  |   |   |                                                |        |   |                                         |   |    |   |   |   |   |   |   |   |   |   |
| Balance      April 1, 2008                                                |   |                  | 113,526,381 |   |               |   | 113,526 |                            |   |   | 26,086,846                                            |   |   |                                                | (20,068,062 | )      |                                         |   | 58,154  |   |   |   | 6,190,466 |   |   |   | (6,161,984 | ) |
| Stock-based      compensation                                             |   |                  | 43,741      |   |               |   | 44      |                            |   |   | 1,814,052                                             |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 1,814,096 |   |   |   | - |   |
| Issuance      of warrants                                                 |   |                  | -           |   |               |   | -       |                            |   |   | 240,000                                               |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 240,000 |   |   |   | - |   |
| Beneficial      Conversion Feature                                        |   |                  | -           |   |               |   | -       |                            |   |   | 557,989                                               |   |   |                                                | -           |   |                                         |   | -       |   |   |   | 557,989 |   |   |   | - |   |
| Currency      translation adjustment                                      |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | -           |   |                                         |   | (1,750  | ) |   |   | (1,750 | ) |   |   | (1,750 | ) |
| Net      loss for the period                                              |   |                  | -           |   |               |   | -       |                            |   |   | -                                                     |   |   |                                                | (4,751,440  | )      |                                         |   | -       |   |   |   | (4,751,440 | ) |   |   | (4,751,440 | ) |
| Balance      June 30, 2008                                                |   |                  | 113,570,122 |   |               |   | 113,570 |                            |   |   | 28,698,888                                            |   |   |                                                | (24,819,502 | )      |                                         |   | 56,404  |   |   |   | 4,049,361 |   |   |   | (10,915,174 | ) |

----

----

----

----

|                           |   | USD      (held in USD) |      |   | USD      (held in EUR) |   |   | USD      (held in CHF) |   |   | USD      (held in other currencies) |   |   | USD TOTAL      JUNE 30, 2008 |   |   | USD      TOTAL 2007 |   |      | USD      TOTAL 2006 |   |
|--------------------------------|--------|------------------------|-----------|--------|------------------------|--------|--------|------------------------|--------|--------|-------------------------------------|--------|--------|-----------------------------------|--------|--------|---------------------|--------|-----------|---------------------|--------|
| Bank      and postal accounts  |   |                   | 7,640,339 |   |                   |   | 1,139  |                   |   |   | 143,317                             |   |   |                              | 4,132  |   |                |   | 7,788,927 |                |   |   | 8,480,771 |   |   |   | 1,090,098 |   |
| Cash      and Cash Equivalents |   |                   | 7,640,339 |   |                   |   | 1,139  |                   |   |   | 143,317                             |   |   |                              | 4,132  |   |                |   | 7,788,927 |                |   |   | 8,480,771 |   |   |   | 1,090,098 |   |

----

| 2008                                       |   | Office      Equipment & Furniture |    |   | Vehicles |   |    | Leasehold      Improvements |   |   | Total  |   |
|--------------------------------------------|--------|---------------------------------------|---------|--------|----------|--------|---------|-----------------------------|--------|--------|--------|--------|
|                                       |   | USD                                   |    |   | USD      |   |    | USD                         |   |   | USD    |   |
| Cost      at January 1                     |   |                                  | 77,845  |   |     |   | 53,000  |                        |   |   | 42,424 |   |   |   | 173,269 |   |
| Additions                                  |   |                                  | 30,464  |   |     |   | 54,649  |                        |   |   | 4,952  |   |   |   | 90,064 |   |
| Disposals                                  |   |                                  | -       |   |     |   | -       |                        |   |   | -      |   |   |   | - |   |
| Cost      at June 30                       |   |                                  | 108,309 |   |     |   | 107,649 |                        |   |   | 47,375 |   |   |   | 263,333 |   |
|                                       |   |                                  |    |   |     |   |    |                        |   |   |   |   |   |   |   |   |
| Accumulated      depreciation at January 1 |   |                                  | (10,471 | )      |     |   | (9,000  | )                           |   |   | (724   | )      |   |   | (20,195 | ) |
| Depreciation                               |   |                                  | (11,268 | )      |     |   | (5,914  | )                           |   |   | (4,656 | )      |   |   | (21,837 | ) |
| Disposals                                  |   |                                  | -       |   |     |   | -       |                        |   |   | -      |   |   |   | - |   |
| Accumulated      depreciation at June 30   |   |                                  | (21,739 | )      |     |   | (14,914 | )                           |   |   | (5,379 | )      |   |   | (42,032 | ) |
|                                       |   |                                  |    |   |     |   |    |                        |   |   |   |   |   |   |   |   |
| Net      book value at June 30             |   |                                  | 86,570  |   |     |   | 92,735  |                        |   |   | 41,996 |   |   |   | 221,301 |   |

----

----

|                                                    |                   | Equity      share  | Equity      share | Equity      share |
|---------------------------------------------------------|------------------------|--------------------|-------------------|-------------------|
|                                                    | Country                | June      30, 2008 | Dec      31, 2007 | Dec      31, 2006 |
| DWM      Petroleum AG, Baar (1)                         | Switzerland            | 100%               | 100%              | -                 |
| Manas      Petroleum AG, Baar (2)                       | Switzerland            | 100%               | 100%              | -                 |
| CJSC      South Petroleum Company, Jalalabat (3)        | Kyrgyz      Republic   | 25%                | 25%               | 25%               |
| CJSC      Somon Oil Company, Dushanbe (4)               | Rep      of Tajikistan | 90%                | 90%               | 90%               |
| Manas      Petroleum of Chile Corporation, Victoria (5) | Canada                 | 100%               | n/a               | n/a               |
| Manas      Management Services Ltd., Nassau (6)         | Bahamas                | 100%               | n/a               | n/a               |
| Manas      Chile Energia Limitada, Santiago (7)         | Chile                  | 100%               | n/a               | n/a               |

| ·   | Manas      Petroleum of Chile Corporation, Victoria is  dormant. |
|--------------------|------------------------------------------------------------------|

| ·   | Manas      Management Services Ltd., Nassau was created to obtain the exploration      license in Chile. |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | Manas      Chile Energia Limitada, Santiago was created to obtain the exploration      license in Chile. |
|--------------------|----------------------------------------------------------------------------------------------------------|

----

The following table provides the total amount oftransactions, which have been entered into with related parties for the relevantfinancial period:

| Board      of directors                                                                          |   |   | 01.01.-06.30.08 |   |   |   | 01.01.-06.30.07 |   |
|--------------------------------------------------------------------------------------------------|--------|--------|-----------------|--------|--------|--------|-----------------|--------|
|                                                                                             |   | USD    |            |   | USD    |   |
| Payments      to directors for office rent                                                       |   |   | 93,108          |   |   |   | 37,110          |   |
| Payments      to related companies controlled by directors for rendered consulting      services |   |   | 5,814           |   |   |   | 198,334         |   |
|                                                                                             |   |   |            |   |   |   |            |   |
|                                                                                             |   |   | 06.30.08        |   |   |   | 06.30.07        |   |
|                                                                                             |   | USD    |            |   | USD    |   |
| Loan      from a director                                                                        |   |   | -               |   |   |   | 201,458         |   |

| Special      Operating Contract |   | Years      2008 - 2011 |       |   | Year      2012 - 2013 |   |       | Year      2014 - 2015 |   |
|---------------------------------|--------|------------------------|------------|--------|-----------------------|--------|------------|-----------------------|--------|
|                            |   | USD                    |       |   | USD                   |   |       | USD                   |   |
| CEOP      (Tranquillo Block)    |   |                   | 14,360,000 |   |                  |   | 10,100,000 |                  |   |   | 8,720,000 |   |

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|                               |   | For      the six months ended |      |   | For      the six months ended |   |
|------------------------------------|--------|-------------------------------|-----------|--------|-------------------------------|--------|
|                               |   | June      30, 2008            |      |   | June      30, 2007            |   |
|                               |   | USD                           |      |   | USD                           |   |
| Wages      and salaries            |   |                          | 4,844,038 |   |                          |   | 1,645,517 |   |
| Social      security contributions |   |                          | 76,308    |   |                          |   | 46,734 |   |
| Pension      fund contribution     |   |                          | 136,086   |   |                          |   | 2,277 |   |
| Other      personnel expenses      |   |                          | 468       |   |                          |   | 1,691 |   |
| Total      Personnel Costs         |   |                          | 5,056,900 |   |                          |   | 1,696,219 |   |

|                               |   | For      the three months ended |      |   | For      the three months ended |   |
|------------------------------------|--------|---------------------------------|-----------|--------|---------------------------------|--------|
|                               |   | June      30, 2008              |      |   | June      30, 2007              |   |
|                               |   | USD                             |      |   | USD                             |   |
| Wages      and salaries            |   |                            | 2,327,549 |   |                            |   | 1,629,058 |   |
| Social      security contributions |   |                            | 50,129    |   |                            |   | 47,862 |   |
| Pension      fund contribution     |   |                            | 113,097   |   |                            |   | 1,288 |   |
| Other      personnel expenses      |   |                            | 468       |   |                            |   | 1,000 |   |
| Total      Personnel Costs         |   |                            | 2,491,243 |   |                            |   | 1,679,208 |   |

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| Item      2. | Management’s      Discussion and Analysis of Financial Condition and Results of      Operation |
|--------------|------------------------------------------------------------------------------------------------------|

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| ·   | Preliminary      interpretation of the new seismic data has been initiated in the Adelaide      office. |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | In      addition to the seismic program several initiatives have been undertaken      in relation to the seismic program. These include data exchange agreements      with neighboring licenses and the provision of funds to SNG (seismic      contractors) for crew upgrades. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      project team in Adelaide has been primarily engaged in technical review      work to define prospects and leads. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | Consolidation      of the database has been undertaken with data acquired in Bishkek      transferred to the database in Adelaide.  Reprocessing and      scanning of Soviet era seismic data and digitizing of well logs have      continued. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      office in Bishkek has been involved in general office administration and      management,  building relationships with industry and government      and resolving various local taxationissues |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | On-going      database assembly with: |
|--------------------|---------------------------------------|

| o   | Digitization      of well wire line log data |
|---------------|----------------------------------------------|

| o   | Rectification      of scanned maps |
|---------------|------------------------------------|

| o   | Field      GPS quality control of well head locations, and incorporation into Santos      mapping and seismic interpretation packages continued (DBMap and      Geoframe) |
|---------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Capture      of relevant information from Soviet-erareports |
|---------------|-------------------------------------------------------------|

| o   | Wireline      log and seismic data loaded into Geoframe master interpretation      project |
|---------------|--------------------------------------------------------------------------------------------|

| o   | Formation      tops data continued to be assembled and bulk loaded into Geoframe      interpretation package |
|---------------|--------------------------------------------------------------------------------------------------------------|

| ·   | Seismic      reprocessing project is complete. |
|--------------------|------------------------------------------------|

| ·   | Scanning      seismic project by SNG iscompleted. |
|--------------------|---------------------------------------------------|

| ·   | All      original hardcopy seismic were scanned in Australia by contractor New Wave      to provide a further dataset, which is being utilized as a final quality      check against the reprocessed and SNG scanning.  This data set      found to be more workable and has been used for current      mapping |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Geophysical      interpretation of digital seismic isproceeding |
|--------------------|-----------------------------------------------------------------|

| ·   | Seismic      interpretation and mapping continued in each of the Tuzluk, Soh, West Soh,      and Nanai permits. |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | Mapping      has been incorporated into plans for proposed new seismic acquisition,      with minor adjustments being made to the location of lines in the 2D      acquisition grid. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Rock      sample petrography and geochemistry reports  completed. |
|--------------------|-------------------------------------------------------------------|

| ·   | Integration      of well velocity data and wireline log data into seismic interpretation      project |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | Geological      well to well correlations |
|--------------------|-------------------------------------------|

| ·   | Thermal      history modeling |
|--------------------|-------------------------------|

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| ·   | Presentations      have been made to the State Agency of Geology (New Director) outlining the      progress made in relation to seismic  acquisition. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Discussions      with the State Agency and others concerning the new Sub Soil laws and the      proposed imposition of license fees continued and representations made      through the IBC (International Business Council). These discussions are      ongoing at the present time. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | General      license administration and reporting continued during the quarter and half      yearly reports were prepared. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| ·   | Digitizing      of electric logs and maps continued during the  period. |
|--------------------|-------------------------------------------------------------------------|

| ·   | Continued      to build in-country relationships with industry and      government. |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | The      Jalalabad office provided support to the seismic field operations and to      drilling planning. |
|--------------------|-----------------------------------------------------------------------------------------------------------|

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