---

UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________to
_______________

Commission File Number: 333-107002

MANAS PETROLEUM
CORPORATION(Exact name of registrant as specified in its
charter)

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

Bahnhofstrasse 9, 6341 Baar,
Switzerland(Address of principal executive offices) (Zip Code)

41 (44) 718 10 30(Registrants telephone
number, including area code)

N/A(Former name, former address and former
fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).[ ] Yes [ ] No

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer | [ ] |                                               | Accelerated filer         | [ ]
|----------------------- | --- | --------------------------------------------- | ------------------------- | ---
|Non-accelerated filer   | [ ] | (Do not check if a smaller reporting company) | Smaller reporting company | [X]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

---

2

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date:
170,367,292 shares of common stock as of May 13, 2011.

---

3

TABLE OF CONTENTS

|PART
      IFINANCIAL INFORMATION                                                                         | 4 
|---------------------------------------------------------------------------------------------------------- | --
|Item
      1. Financial Statements                                                                         | 4 
|Item
      2. Managements Discussion and Analysis of Financial Condition and Results
      of Operations. | 25
|Item
      3. Quantitative and Qualitative Disclosures about Market Risk                                   | 30
|Item
      4T. Controls and Procedures.                                                                    | 30
|PART
      IIOTHER INFORMATION                                                                            | 30
|Item
      1. Legal Proceedings.                                                                           | 30
|Item
      2. Unregistered Sales of Equity Securities and Use of Proceeds                                  | 31
|Item
      3. Defaults upon Senior Securities.                                                             | 31
|Item
      4. (Removed and Reserved).                                                                      | 31
|Item
      5. Other Information                                                                            | 31
|Item
      6. Exhibits.                                                                                    | 31
|SIGNATURES                                                                                                 | 34

---

|4                                          
|-------------------------------------------
|                                           
|PART IFINANCIAL INFORMATION               
|Item 1. Financial Statements.              
|                                           
|MANAS PETROLEUM CORPORATION                
|(AN EXPLORATION STAGE COMPANY)             
|CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|UNAUDITED                                  
|                                           
|CONDENSED CONSOLIDATED BALANCE SHEETS      

|                                                                                                                                                               |  | 03.31.2011 |  |  | 12.31.2010 | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- |  |  | ---------- | 
|                                                                                                                                                               |  | USD        |  |  | USD        | 
|ASSETS                                                                                                                                                         |  |            |  |  |            | 
|                                                                                                                                                               |  |            |  |  |            | 
|Cash and cash equivalents                                                                                                                                      |  | 399'931    |  |  | 1'736'571  | 
|Restricted cash                                                                                                                                                |  | 86'958     |  |  | 87'063     | 
|Accounts receivable                                                                                                                                            |  | 30'930     |  |  | 31'090     | 
|Prepaid expenses                                                                                                                                               |  | 256'881    |  |  | 337'124    | 
|Total current assets                                                                                                                                           |  | 774'699    |  |  | 2'191'848  | 
|                                                                                                                                                               |  |            |  |  |            | 
|Prepaid issuance costs                                                                                                                                         |  | 428'365    |  |  | -          | 
|Tangible fixed
      assets                                                                                                                                    |  | 72'581     |  |  | 85'420     | 
|Investment in associate                                                                                                                                        |  | 238'304    |  |  | 238'304    | 
|Investment in
      associate (Petromanas)                                                                                                                     |  | 63'637'625 |  |  | 72'257'882 | 
|Total non-current assets                                                                                                                                       |  | 64'376'875 |  |  | 72'581'606 | 
|                                                                                                                                                               |  |            |  |  |            | 
|TOTAL ASSETS                                                                                                                                                   |  | 65'151'574 |  |  | 74'773'454 | 
|                                                                                                                                                               |  |            |  |  |            | 
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                           |  |            |  |  |            | 
|                                                                                                                                                               |  |            |  |  |            | 
|Accounts payable                                                                                                                                               |  | 197'562    |  |  | 103'129    | 
|Accrued expenses Professional fees                                                                                                                             |  | 350'312    |  |  | 277'762    | 
|Other accrued expenses                                                                                                                                         |  | 60'535     |  |  | 96'110     | 
|Total current
      liabilities                                                                                                                                |  | 608'409    |  |  | 477'001    | 
|                                                                                                                                                               |  |            |  |  |            | 
|Pension liabilities                                                                                                                                            |  | 55'522     |  |  | 55'522     | 
|Total non-current liabilities                                                                                                                                  |  | 55'522     |  |  | 55'522     | 
|                                                                                                                                                               |  |            |  |  |            | 
|TOTAL LIABILITIES                                                                                                                                              |  | 663'931    |  |  | 532'523    | 
|                                                                                                                                                               |  |            |  |  |            | 
|Temporary equity (common stock USD 0.001
      par value, 0 and 6'454'993 shares, respectively)                                                                |  | -          |  |  | 2'517'447  | 
|Common stock (300,000,000 shares authorized, USD 0.001 par
      value, 
      125'914'661 and 124'987'393 shares, respectively, issued and
      outstanding) |  | 125'915    |  |  | 124'987    | 
|Additional paid-in capital                                                                                                                                     |  | 56'476'303 |  |  | 53'836'749 | 
|Retained
      earnings/(deficit) accumulated during the exploration stage                                                                                     |  | 7'834'424  |  |  | 17'710'747 | 
|Accumulated other comprehensive income                                                                                                                         |  |            |  |  |            | 
|Currency
      translation adjustment                                                                                                                          |  | 51'001     |  |  | 51'001     | 
|Total shareholders' equity                                                                                                                                     |  | 64'487'643 |  |  | 71'723'484 | 
|                                                                                                                                                               |  |            |  |  |            | 
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                     |  | 65'151'574 |  |  | 74'773'454 | 

---

|5                                                                                    
|-------------------------------------------------------------------------------------
|                                                                                     
|MANAS PETROLEUM CORPORATION                                                          
|(AN EXPLORATION STAGE COMPANY)                                                       
|CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                          
|UNAUDITED                                                                            
|                                                                                     
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
      COMPREHENSIVE INCOME/(LOSS)

|                                                                      |  | For the three months ended |   |  | Period from |  
|--------------------------------------------------------------------- |  | -------------------------- | - |  | ----------- | -
|                                                                      |  |                            |   |  |             |  
|                                                                      |  |                            |   |  |             |  
|                                                                      |  | 03.31.2011                 |   |  | 03.31.2010  |  
|                                                                      |  | USD                        |   |  | USD         |  
|OPERATING REVENUES                                                    |  |                            |   |  |             |  
|                                                                      |  |                            |   |  |             |  
|Other revenues                                                        |  | -                          |   |  | -           |  
|Total
      revenues                                                  |  | -                          |   |  | -           |  
|                                                                      |  |                            |   |  |             |  
|OPERATING EXPENSES                                                    |  |                            |   |  |             |  
|                                                                      |  |                            |   |  |             |  
|Personnel costs                                                       |  | (367'002                   | ) |  | (2'501'193  | )
|Exploration costs                                                     |  | (253'540                   | ) |  | (63'657     | )
|Depreciation                                                          |  | (13'450                    | ) |  | (16'209     | )
|Consulting fees                                                       |  | (272'408                   | ) |  | (417'423    | )
|Administrative
      costs                                            |  | (315'970                   | ) |  | (243'477    | )
|Total operating expenses                                              |  | (1'222'370                 | ) |  | (3'241'960  | )
|                                                                      |  |                            |   |  |             |  
|Gain from sale of investment                                          |  | -                          |   |  | -           |  
|Loss from sale of
      investment                                    |  | -                          |   |  | -           |  
|OPERATING INCOME/(LOSS)                                               |  | (1'222'370                 | ) |  | (3'241'960  | )
|                                                                      |  |                            |   |  |             |  
|NON-OPERATING INCOME / (EXPENSE)                                      |  |                            |   |  |             |  
|Exchange differences                                                  |  | (24'547                    | ) |  | (82'468     | )
|Changes in fair value of warrants                                     |  | -                          |   |  | 111'242     |  
|Warrants issuance expense                                             |  | -                          |   |  | -           |  
|Gain from sale of subsidiary                                          |  | -                          |   |  | 57'850'918  |  
|Change in fair value of investment in associate                       |  | (8'620'257                 | ) |  | 28'812'901  |  
|Interest income                                                       |  | 163                        |   |  | 50          |  
|Interest expense                                                      |  | (10'656                    | ) |  | (321'310    | )
|Loss on extinguishment of debt                                        |  | -                          |   |  | (117'049    | )
|Income/(Loss)
      before taxes and equity in net loss of associate  |  | (9'877'667                 | ) |  | 83'012'325  |  
|                                                                      |  |                            |   |  |             |  
|                                                                      |  |                            |   |  |             |  
|Income taxes                                                          |  | 1'344                      |   |  | (1'009      | )
|Equity in net loss
      of associate                                 |  | -                          |   |  | -           |  
|Net income/(loss)                                                     |  | (9'876'323                 | ) |  | 83'011'315  |  
|                                                                      |  |                            |   |  |             |  
|Net income/(loss) attributable to non-controlling interest            |  | -                          |   |  | -           |  
|Net
      income/(loss) attributable to Manas                         |  | (9'876'323                 | ) |  | 83'011'315  |  
|                                                                      |  |                            |   |  |             |  
|Currency
      translation adjustment attributable to Manas           |  | -                          |   |  | -           |  
|Net comprehensive income/(loss) attributable to
      Manas           |  | (9'876'323                 | ) |  | 83'011'315  |  
|                                                                      |  |                            |   |  |             |  
|Net comprehensive loss attributable to non-controlling
      interest |  | -                          |   |  | -           |  
|Net
      comprehensive income/(loss)                                 |  | (9'876'323                 | ) |  | 83'011'315  |  
|                                                                      |  |                            |   |  |             |  
|Weighted average number of outstanding shares (basic)                 |  | 125'862'567                |   |  | 119'053'400 |  
|Weighted average number of outstanding shares (diluted)               |  | 125'862'567                |   |  | 133'606'613 |  
|                                                                      |  |                            |   |  |             |  
|Basic earnings / (loss) per share
      attributable to Manas         |  | (0.08                      | ) |  | 0.70        |  
|Diluted
      earnings / (loss) per share attributable to Manas       |  | (0.08                      | ) |  | 0.62        |  

---

|6                                          
|-------------------------------------------
|                                           
|MANAS PETROLEUM CORPORATION                
|(AN EXPLORATION STAGE COMPANY)             
|CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|UNAUDITED                                  
|CONDENSED CONSOLIDATED CASH FLOW STATEMENT 

|                                                                              |  | For the three months ended |   |  | Period from |  
|----------------------------------------------------------------------------- |  | -------------------------- | - |  | ----------- | -
|                                                                              |  |                            |   |  |             |  
|                                                                              |  |                            |   |  |             |  
|                                                                              |  | 03.31.2011                 |   |  | 03.31.2010  |  
|                                                                              |  | USD                        |   |  | USD         |  
|OPERATING ACTIVITIES                                                          |  |                            |   |  |             |  
|                                                                              |  |                            |   |  |             |  
|Net income/(loss)                                                             |  | (9'876'323                 | ) |  | 83'011'315  |  
|                                                                              |  |                            |   |  |             |  
|                                                                              |  |                            |   |  |             |  
|To reconcile
      net income/(loss) to net cash used in operating activities |  |                            |   |  |             |  
|                                                                              |  |                            |   |  |             |  
|Gain from sale of subsidiary                                                  |  | -                          |   |  | (57'850'918 | )
|Gain from sale of investment                                                  |  | -                          |   |  | -           |  
|Loss from sale of investment                                                  |  | -                          |   |  | -           |  
|Change in fair value of investment in
      associate                         |  | 8'620'257                  |   |  | (28'812'901 | )
|Equity in net loss of associate                                               |  | -                          |   |  | -           |  
|Depreciation                                                                  |  | 13'450                     |   |  | 16'209      |  
|Amortization of debt issuance costs                                           |  | -                          |   |  | 112'619     |  
|Warrant issuance expense / (income)                                           |  | -                          |   |  | (111'242    | )
|Exchange differences                                                          |  | 24'547                     |   |  | 81'517      |  
|Non cash adjustment to exploration costs                                      |  | -                          |   |  | (204'753    | )
|Non cash interest income                                                      |  | -                          |   |  | (25'619     | )
|Interest expense on contingently
      convertible loan                       |  | -                          |   |  | 29'893      |  
|Loss on extinguishment of contingently convertible loan                       |  | -                          |   |  | 83'202      |  
|Interest expense on debentures                                                |  | -                          |   |  | 78'974      |  
|Loss on extinguishment of debentures                                          |  | -                          |   |  | 33'847      |  
|Stock-based compensation                                                      |  | 123'035                    |   |  | 2'412'161   |  
|Decrease / (increase) in receivables and prepaid expenses                     |  | 80'403                     |   |  | (342'199    | )
|(Decrease) / increase in accounts payables                                    |  | 94'433                     |   |  | (41'156     | )
|(Decrease) / increase in accrued expenses                                     |  | 36'975                     |   |  | (633'434    | )
|Change in pension liability                                                   |  | -                          |   |  | -           |  
|Cash flow (used
      in) / from operating activities                         |  | (883'223                   | ) |  | (2'162'485  | )
|                                                                              |  |                            |   |  |             |  
|INVESTING ACTIVITIES                                                          |  |                            |   |  |             |  
|                                                                              |  |                            |   |  |             |  
|Purchase of tangible fixed assets and computer software                       |  | (611                       | ) |  | (880        | )
|Sale of tangible fixed assets and computer software                           |  | -                          |   |  | -           |  
|Proceeds from sale of investment                                              |  | -                          |   |  | 10'415'810  |  
|Decrease / (increase) restricted cash                                         |  | 105                        |   |  | (26'127     | )
|Acquisition of
      investment in associate                                  |  | -                          |   |  | -           |  
|Cash flow (used in) / from investing activities                               |  | (506                       | ) |  | 10'388'802  |  
|                                                                              |  |                            |   |  |             |  
|FINANCING ACTIVITIES                                                          |  |                            |   |  |             |  
|                                                                              |  |                            |   |  |             |  
|Contribution share capital founders                                           |  | -                          |   |  | -           |  
|Issuance of units                                                             |  | -                          |   |  | -           |  
|Issuance of contingently convertible loan                                     |  | -                          |   |  |             |  
|Issuance of debentures                                                        |  | -                          |   |  |             |  
|Issuance of promissory notes to
      shareholders                            |  | -                          |   |  |             |  
|Repayment of contingently convertible loan                                    |  | -                          |   |  | (2'000'000  | )
|Repayment of debentures                                                       |  | -                          |   |  | (4'000'000  | )
|Repayment of promissory notes to shareholders                                 |  | -                          |   |  | (540'646    | )
|Proceeds from exercise of options                                             |  | -                          |   |  | -           |  
|Issuance of warrants                                                          |  | -                          |   |  | -           |  
|Proceeds from exercise of warrants                                            |  | -                          |   |  | 88'500      |  
|Cash arising on recapitalization                                              |  | -                          |   |  | -           |  
|Shareholder loan repaid                                                       |  | -                          |   |  | -           |  
|Shareholder loan
      raised                                                 |  | -                          |   |  | -           |  
|Repayment of bank loan                                                        |  | -                          |   |  | -           |  
|Increase in bank loan                                                         |  | -                          |   |  | -           |  
|Increase in short-term loan                                                   |  | -                          |   |  | -           |  
|Prepaid issuance costs                                                        |  | (428'365                   | ) |  | -           |  
|Payment of debt issuance costs                                                |  | -                          |   |  | -           |  
|(Decrease) /
      increase in bank overdraft                                 |  | -                          |   |  | (196'154    | )
|Cash flow (used in) / from financing activities                               |  | (428'365                   | ) |  | (6'648'300  | )
|                                                                              |  |                            |   |  |             |  
|                                                                              |  |                            |   |  |             |  
|Net change in
      cash and cash equivalents                                 |  | (1'312'094                 | ) |  | 1'578'016   |  
|                                                                              |  |                            |   |  |             |  
|Cash and cash equivalents at the beginning of the period                      |  | 1'736'571                  |   |  | 804'663     |  
|Currency translation effect on cash and cash equivalents                      |  | (24'547                    | ) |  | (81'516     | )
|Cash and cash
      equivalents at the end of the period                      |  | 399'931                    |   |  | 2'301'163   |  

---

7

|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  |  
|Debenture interest paid in common shares                                 |  | - |  |  | -          |   |  | 213'479    |  
|Forgiveness of advance payment from Petromanas Energy Inc.               |  | - |  |  | 917'698    |   |  | 917'698    |  
|Initial fair value of shares of investment
      in Petromanas           |  | - |  |  | 46'406'821 |   |  | 46'406'821 |  
|Proceeds from sale yet to be paid recorded under other
      receivables |  | - |  |  | 350'000    |   |  | -          |  
|Forgiveness of receivable due from Manas Adriatic GmbH                   |  | - |  |  | (3'449'704 | ) |  | (3'449'704 | )

---

|8                                                                
|-----------------------------------------------------------------
|                                                                 
|MANAS PETROLEUM CORPORATION                                      
|CONSOLIDATED FINANCIAL STATEMENTS                                
|CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY /
      (DEFICIT)

|                                            |  |             |  |  |               |  |  |                 |   |  | Deficit     |   |  |                 |   |  |                         |  
|------------------------------------------- |  | ----------- |  |  | ------------- |  |  | --------------- | - |  | ----------- | - |  | --------------- | - |  | ----------------------- | -
|                                            |  |             |  |  |               |  |  |                 |   |  | accumulated |   |  | **Accumulated** |   |  |                         |  
|                                            |  |             |  |  |               |  |  |                 |   |  | during the  |   |  | Other Compre-   |   |  | Total share-            |  
|                                            |  | Number of   |  |  |               |  |  | Additional      |   |  | development |   |  | hensive Income  |   |  | **holders'
    equity** |  
|SHAREHOLDERS' EQUITY / (DEFICIT)            |  | Shares      |  |  | Share Capital |  |  | paid-in capital |   |  | stage       |   |  | (Loss)          |   |  | /
      (deficit)       |  
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|Balance May 25, 2004                        |  | -           |  |  | -             |  |  | -               |   |  | -           |   |  | -               |   |  | -                       |  
|Contribution share capital from founders    |  | 80'000'000  |  |  | 80'000        |  |  | 19              |   |  | -           |   |  | -               |   |  | 80'019                  |  
|Currency translation adjustment             |  | -           |  |  | -             |  |  | -               |   |  | -           |   |  | (77'082         | ) |  | (77'082                 | )
|Net loss for the period                     |  | -           |  |  | -             |  |  | -               |   |  | (601'032    | ) |  | -               |   |  | (601'032                | )
|Balance December 31, 2004                   |  | 80'000'000  |  |  | 80'000        |  |  | 19              |   |  | (601'032    | ) |  | (77'082         | ) |  | (598'095                | )
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|Balance January 1, 2005                     |  | 80'000'000  |  |  | 80'000        |  |  | 19              |   |  | (601'032    | ) |  | (77'082         | ) |  | (598'095                | )
|Currency translation adjustment             |  | -           |  |  | -             |  |  | -               |   |  |             |   |  | 218'699         |   |  | 218'699                 |  
|Net loss for the year                       |  | -           |  |  | -             |  |  | -               |   |  | (1'993'932  | ) |  | -               |   |  | (1'993'932              | )
|Balance December 31, 2005                   |  | 80'000'000  |  |  | 80'000        |  |  | 19              |   |  | (2'594'964  | ) |  | 141'617         |   |  | (2'373'328              | )
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|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                 | )
|Net income for the year                     |  | -           |  |  | -             |  |  | -               |   |  | 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                 |  
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|Balance January 1, 2007                     |  | 80'000'000  |  |  | 80'000        |  |  | 1'466'071       |   |  | (1'078'960  | ) |  | 53'464          |   |  | 520'575                 |  
|Recapitalization transaction                |  | 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                   |  
|Net loss for the year                       |  | -           |  |  | -             |  |  | -               |   |  | (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               |  
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|Balance January 1, 2008                     |  | 112'156'488 |  |  | 112'156       |  |  | 21'550'636      |   |  | (13'904'456 | ) |  | 56'533          |   |  | 7'814'870               |  
|Stock-based compensation                    |  | 2'895'245   |  |  | 2'895         |  |  | 9'787'978       |   |  | -           |   |  | -               |   |  | 9'790'874               |  
|Private placement of Units, issued for cash |  | 4'000'000   |  |  | 4'000         |  |  | 1'845'429       |   |  | -           |   |  | -               |   |  | 1'849'429               |  
|Issuance of warrants                        |  | -           |  |  | -             |  |  | 10'110'346      |   |  | -           |   |  | -               |   |  | 10'110'346              |  
|Beneficial Conversion Feature               |  | -           |  |  | -             |  |  | 557'989         |   |  | -           |   |  | -               |   |  | 557'989                 |  
|Currency translation adjustment             |  | -           |  |  | -             |  |  | -               |   |  | -           |   |  | (13'212         | ) |  | (13'212                 | )
|Net loss for the period                     |  | -           |  |  | -             |  |  | -               |   |  | (30'296'106 | ) |  | -               |   |  | (30'296'106             | )
|Balance December 31, 2008                   |  | 119'051'733 |  |  | 119'052       |  |  | 43'852'378      |   |  | (44'200'563 | ) |  | 43'322          |   |  | (185'811                | )
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|Balance January 1, 2009                     |  | 119'051'733 |  |  | 119'052       |  |  | 43'852'378      |   |  | (44'200'563 | ) |  | 43'322          |   |  | (185'811                | )
|Adoption of ASC 815-40                      |  | -           |  |  | -             |  |  | (9'679'775      | ) |  | 9'086'971   |   |  | -               |   |  | (592'804                | )
|Reclassification warrants                   |  | -           |  |  | -             |  |  | 10'883'811      |   |  | -           |   |  | -               |   |  | 10'883'811              |  
|Stock-based compensation                    |  | -           |  |  | -             |  |  | 4'475'953       |   |  | -           |   |  | -               |   |  | 4'475'953               |  
|Currency translation adjustment             |  | -           |  |  | -             |  |  | -               |   |  | -           |   |  | 7'679           |   |  | 7'679                   |  
|Net loss for the year                       |  | -           |  |  | -             |  |  | -               |   |  | (21'618'015 | ) |  | -               |   |  | (21'618'015             | )
|Balance December 31, 2009                   |  | 119'051'733 |  |  | 119'052       |  |  | 49'532'367      |   |  | (56'731'607 | ) |  | 51'001          |   |  | (7'029'187              | )
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|Balance January 1, 2010                     |  | 119'051'733 |  |  | 119'052       |  |  | 49'532'367      |   |  | (56'731'607 | ) |  | 51'001          |   |  | (7'029'187              | )
|Exercise of warrants                        |  | 3'832'133   |  |  | 3'832         |  |  | 2'257'127       |   |  | -           |   |  | -               |   |  | 2'260'959               |  
|FV adjustment of exercised warrants         |  | -           |  |  | -             |  |  | 72'643          |   |  | -           |   |  | -               |   |  | 72'643                  |  
|Reclassification warrants                   |  | -           |  |  | -             |  |  | 77'439          |   |  | -           |   |  | -               |   |  | 77'439                  |  
|Stock-based compensation                    |  | 2'103'527   |  |  | 2'104         |  |  | 4'174'558       |   |  | -           |   |  | -               |   |  | 4'176'662               |  
|Shares to be issued                         |  | -           |  |  | -             |  |  | 240'062         |   |  | -           |   |  | -               |   |  | 240'062                 |  
|Redeemable shares                           |  | -           |  |  | -             |  |  | (2'517'447      | ) |  | -           |   |  | -               |   |  | (2'517'447              | )
|Net income for the period                   |  | -           |  |  | -             |  |  | -               |   |  | 74'442'353  |   |  | -               |   |  | 74'442'353              |  
|Balance December 31, 2010                   |  | 124'987'393 |  |  | 124'988       |  |  | 53'836'749      |   |  | 17'710'746  |   |  | 51'001          |   |  | 71'723'484              |  
|                                            |  |             |  |  |               |  |  |                 |   |  |             |   |  |                 |   |  |                         |  
|Balance January 1, 2011                     |  | 124'987'393 |  |  | 124'988       |  |  | 53'836'749      |   |  | 17'710'746  |   |  | 51'001          |   |  | 71'723'484              |  
|Stock-based compensation                    |  | 3'951       |  |  | 4             |  |  | 123'031         |   |  | -           |   |  | -               |   |  | 123'035                 |  
|Exercise of options                         |  | 923'317     |  |  | 923           |  |  | (923            | ) |  | -           |   |  | -               |   |  | -                       |  
|Redeemable shares                           |  | -           |  |  | -             |  |  | 2'517'447       |   |  | -           |   |  | -               |   |  | 2'517'447               |  
|Net income for the period                   |  | -           |  |  | -             |  |  | -               |   |  | (9'876'323  | ) |  | -               |   |  | (9'876'323              | )
|Balance March 31, 2011                      |  | 125'914'661 |  |  | 125'915       |  |  | 56'476'303      |   |  | 7'834'424   |   |  | 51'001          |   |  | 64'487'643              |  

---

9

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial
statements of Manas Petroleum Corporation ("Manas" or the Company") and its
subsidiaries (Group) for the three months period ended March 31, 2011 have
been prepared in accordance with U.S. generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto, included in the Group's Annual
Report on Form 10-K for the year ended December 31, 2010.

In terms of the oil and gas industry lifecycle, the Company
considers itself to be an exploration stage company. Since it has not realized
any revenues from its planned principal operations, the Company presents its
financial statements in conformity with accounting principles generally accepted
in the United States of America (US GAAP) that apply in establishing operating
enterprises, i.e. development stage companies. As an exploration stage
enterprise, the Company discloses the deficit accumulated during the exploration
stage and the cumulative statements of operations and cash flows from inception
to the current balance sheet date.

The Company, formerly known as Express Systems Corporation, was
incorporated in the State of Nevada on July 9, 1988.

On April 10, 2007, the Company completed the Exchange
Transaction whereby it acquired its then sole subsidiary DWM Petroleum AG, Baar
(DWM) pursuant to an exchange agreement signed in November 2006 whereby 100%
of the shares of DWM were exchanged for 80,000,000 common shares of the Company.
As part of the closing of this exchange transaction, the Company issued 800,000
shares as finders fees at the closing price of $3.20.

The acquisition of DWM has been accounted for as a merger of a
private operating company into a non-operating public shell. Consequently, the
Company is the continuing legal registrant for regulatory purposes and DWM is
treated as the continuing accounting acquirer for accounting and reporting
purposes. The assets and liabilities of DWM remained at historic cost. Under US
GAAP in transactions involving the merger of a private operating company into a
non-operating public shell, the transaction is equivalent to the issuance of
stock by DWM for the net monetary assets of the Company, accompanied by a
recapitalization. The accounting is identical to a reverse acquisition, except
that no goodwill or other intangibles are recorded.

The Group follows a strategy focused on the exploration and
development of oil and gas resources in Central and East Asia (Kyrgyz Republic,
Republic of Tajikistan and Republic of Mongolia) and in the Balkan Region
(participation in Petromanas Energy Inc. with activities in Albania). Although
we are currently focused primarily on projects located in certain geographic
regions, we remain open to attractive opportunities in other areas. We do not
have any known reserves on any of our properties.

2. GOING CONCERN

The condensed consolidated financial statements have been
prepared on the assumption that the Group will continue as a going concern.

Our cash balance as of March 31, 2011 was $399,931.

In addition to our cash balance, of the 200,000,000 common
shares of Petromanas held by the Group, 40,000,000 were freely tradable as of
March 31, 2011. The quoted market price of Petromanas shares on March 31, 2011
was CAD 0.3350 (approximately $0.3445) . Hence, the market value of the freely
tradable shares was approximately $13,780,000.

Based on our business plan for the next 12 months, we will need
$8,060,000 to fund our operations.

---

10

Given our net working capital plus our freely tradable shares
of Petromanas, we do not expect to need additional funding from external sources
to cover our monthly burn rate of approximately $290,000 and minimum commitments
before April 2012.

In order to continue to implement the geological work program
for our projects particularly in Central and East Asia and to finance continuing
operations, the Group will require further funds. We expect these funds will be
raised through additional equity and/or debt financing. If we are not able to
raise the required funds, we would consider farming-out projects in order to
reduce our financial commitments. Any additional equity financing may be
dilutive to shareholders, and debt financing, if available, will increase
expenses and may involve restrictive covenants. The Company will be required to
raise additional capital on terms which are uncertain, especially under the
current capital market conditions. Under these circumstances, if the Company is
unable to obtain capital or is required to raise it on undesirable terms, it may
have a material adverse effect on the Company's financial condition.

On May 6, the Company completed a public offering of units
pursuant to a long form prospectus filed in all of the Provinces of Canada
except Quebec and a registration statement filed with the Securities and
Exchange Commission on Form S-1 in the United States. In the offering, the
Company sold a total of 44,450,500 units at a price of $0.50 per unit for
aggregate gross proceeds of $22,225,250. Each unit consisted of one share of
common stock in the capital of the Company and one common share purchase
warrant, and each warrant entitles the purchaser to purchase one additional
common share until May 6, 2014 at a purchase price of $0.70 per share.

3. ACCOUNTING POLICIES

The Groups condensed consolidated financial statements are
prepared in accordance with US GAAP. The preparation of financial statements in
conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets, liabilities and disclosures, if any,
of contingent assets and liabilities at the date of the financial statements.
Actual results could differ from these estimates.

The accompanying financial data as of March 31, 2011 and
December 31, 2010 and for the three month periods ended March 31, 2011 and 2010
and for the period from inception, May 25, 2004, to March 31, 2011 has been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC).

The complete accounting policies followed by the Group are set
forth in Note 3 to the audited consolidated financial statements contained in
the Group's Annual Report on Form 10-K for the year ended December 31, 2010.

In the opinion of management, all adjustments (which include
normal recurring adjustments, except as disclosed herein) necessary to present a
fair statement of financial position as of March 31, 2011 and December 31, 2010,
results of operations for the three-month periods ended March 31, 2011 and 2010
and for the period from inception, May 25, 2004, to March 31, 2011, cash flows
for the three-month periods ended March 31, 2011 and 2010 and for the period
from inception, May 25, 2004, to March 31, 2011 and statement of shareholders
equity (deficit) for the period from inception, May 25, 2004, to March 31, 2011,
as applicable, have been made. The results of operations for the three-month
period ended March 31, 2011 are not necessarily indicative of the operating
results for the full fiscal year or any future periods.

4. RECENT ACCOUNTING PRONOUNCEMENTS

Recently adopted accounting pronouncements

In April 2010, the FASB issued ASU 2010-13, "Compensation -
Stock Compensation (Topic 718) - Effect of Denominating the Exercise Price of a
Share-Based Payment Award in the Currency of the Market in Which the Underlying
Equity Security Trades." ASU 2010-13 provides amendments to Topic 718 to clarify
that an employee share-based payment award with an exercise price denominated in
the currency of a market in which a substantial portion of the entity's equity
securities trades should not be considered to contain a condition that is not a
market, performance, or service condition. Therefore, an entity would not
classify such an award as a liability if it otherwise qualifies as equity. The
amendments in ASU 2010-13 are effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2010. The
Company adopted ASU 2010-13 as of January 1, 2011 and its application had no
impact on the Companys condensed consolidated financial statements.

---

11

5. CASH AND CASH EQUIVALENTS

|                          |  |               |  |  |               |  |  |               |  |  | USD (held   |  |  |                |  |  |                    | 
|------------------------- |  | ------------- |  |  | ------------- |  |  | ------------- |  |  | ----------- |  |  | -------------- |  |  | ------------------ | 
|                          |  | USD (held     |  |  | USD (held     |  |  | USD (held     |  |  | in other    |  |  | USD TOTAL      |  |  | USD TOTAL          | 
|                          |  | in
      USD) |  |  | in
      EUR) |  |  | in
      CHF) |  |  | currencies) |  |  | March 31, 2010 |  |  | Dec
      31, 2010 | 
|Cash and Cash Equivalents |  | 308'571       |  |  | 10'974        |  |  | 74'798        |  |  | 5'587       |  |  | 399'931        |  |  | 1'736'571          | 

Cash and cash equivalents are available at the Groups own
disposal, and there is no restriction or limitation on withdrawal and/or use of
these funds. The Groups cash equivalents are placed with high credit rated
financial institutions. The carrying amount of these assets approximates their
fair value.

6. TANGIBLE FIXED ASSETS

|2011                                  |  | Office Equipment |   |  | Vehicles |   |  | Leasehold    |   |  | Total    |  
|------------------------------------- |  | ---------------- | - |  | -------- | - |  | ------------ | - |  | -------- | -
|                                      |  | & Furniture      |   |  |          |   |  | Improvements |   |  |          |  
|                                      |  | USD              |   |  | USD      |   |  | USD          |   |  | USD      |  
|Cost at January 1                     |  | 125'196          |   |  | 89'500   |   |  | 47'375       |   |  | 262'071  |  
|Additions                             |  | 611              |   |  | -        |   |  | -            |   |  | 611      |  
|Cost at March 31                      |  | 125'807          |   |  | 89'500   |   |  | 47'375       |   |  | 262'682  |  
|                                      |  |                  |   |  |          |   |  |              |   |  |          |  
|Accumulated depreciation at January 1 |  | (84'080          | ) |  | (63'501  | ) |  | (29'069      | ) |  | (176'651 | )
|Depreciation                          |  | (5'791           | ) |  | (5'290   | ) |  | (2'369       | ) |  | (13'450  | )
|Accumulated depreciation at March 31  |  | (89'873          | ) |  | (68'791  | ) |  | (31'438      | ) |  | (190'101 | )
|                                      |  |                  |   |  |          |   |  |              |   |  |          |  
|Net book value at March 31            |  | 35'934           |   |  | 20'709   |   |  | 15'937       |   |  | 72'581   |  

Depreciation expense for the three-month period ended March 31,
2011 and 2010 was $13,450 and $16,209, respectively.

7. STOCK COMPENSATION PROGRAM

On May 1, 2007 the Board of Directors approved the granting of
stock options according to a Nonqualified Stock Option Plan. This stock option
plan has the purpose (a) to ensure the retention of the services of existing
executive personnel, key employees, and Directors of the Company or its
affiliates; (b) to attract and retain competent new executive personnel, key
employees, consultants and Directors; (c) to provide incentive to all such
personnel, employees, consultants and Directors to devote their utmost effort
and skill to the advancement and betterment of the Company, by permitting them
to participate in the ownership of the Company and thereby in the success and
increased value of the Company; and (d) allowing vendors, service providers,
consultants, business associates, strategic partners, and others, with or that
the Board of Directors anticipates will have an important business relationship
with the Company or its affiliates, the opportunity to participate in the
ownership of the Company and thereby to have an interest in the success and
increased value of the Company.

This plan constitutes a single omnibus plan, the Nonqualified
Stock Option Plan (NQSO Plan) which provides grants of nonqualified stock
options (NQSOs). The maximum number of shares of common stock that may be
purchased under the plan is 20,000,000.

Stock-based compensation costs are recognized in earnings using
the fair-value based method for all awards granted. For employees fair value is
estimated at the grant date and for non-employees fair value is re-measured at
each reporting date. Compensation costs for unvested stock options and unvested
share grants are expensed over the requisite service period on a straight-line
basis.

---

12

On January 5, 2011, we issued 1,000 shares for the services
performed during the month of December 2010 pursuant to a consulting agreement
entered into on December 7, 2010 with a consultant to provide our company with
business opportunities in petroleum exploration and development.

On January 10, 2011, we issued 923,317 shares of our common
stock at an exercise price of $0.26 per share upon exercise of stock options
which we had granted previously. 250,000 of these shares are subject to a
dribble-out clause, which allows a cumulative release of 3% of these shares
(7,500 shares) every quarter.

On February 3, 2011, we issued 1,186 shares for services
performed during the month of January 2011 pursuant to a consulting agreement
entered into on December 7, 2010 with a consultant to provide our company with
business opportunities in petroleum exploration and development.

On March 2, 2011, we issued 1,765 shares for services performed
during the month of February 2011 pursuant to a consulting agreement entered
into on December 7, 2010 with a consultant to provide our company with business
opportunities in petroleum exploration and development.

On March 31, 2011, due to the termination of an employment
agreement as of December 31, 2010 1,500,000 vested options with an exercise
price of $0.70 expired unexercised.

7.1. Stock Option Grants

The Company calculates the fair value of the options granted
applying the Black-Scholes option pricing model. Expected volatility is either
based on the Companys own historical share price volatility, or on an average
of historical volatility data from a peer group, whichever is more suitable to
price the respective stock option grant. The Companys share price data can be
traced back to April 2, 2007, and the Company believes that this set of data is
sufficient to determine expected volatility as input for the Black-Scholes
option pricing model. In cases, where the contractual option term substantially
exceeds the Companys own historical data, information regarding historical
volatility from the peer group is considered when determining expected
volatility.

The weighted average assumptions for the variables used in the
Black-Scholes model during the three-month periods ended March 31, 2011 and
March 31, 2010 are noted in the following table:

|                               |  | Three months period ended | 
|------------------------------ |  | ------------------------- | 
|                               |  | March 31, 2011            | 
|Expected dividend yield        |  | *                         | 
|Expected
      volatility      |  | *                         | 
|Risk-free interest rate        |  | *                         | 
|Expected term (in
      years) |  | *                         | 

* no options have been granted during the three months period
ended March 31, 2011

During the three-month periods ended March 31, 2011 and 2010,
the weighted average fair value of options granted was $0 and $0.61 at the grant
date, respectively.

The following table summarizes the Company's stock option
activity for the three-month period ended March 31, 2011:

---

13

|                                    |  |              |   |  |           |  |  | Weighted-    |  |  |                     | 
|----------------------------------- |  | ------------ | - |  | --------- |  |  | ------------ |  |  | ------------------- | 
|                                    |  |              |   |  | Weighted- |  |  | average      |  |  |                     | 
|                                    |  |              |   |  | average   |  |  | remaining    |  |  |                     | 
|                                    |  | Shares under |   |  | exercise  |  |  | contractual  |  |  | Aggregate           | 
|Options                             |  | option       |   |  | price     |  |  | term (years) |  |  | **intrinsic value** | 
|Outstanding at December 31, 2010    |  | 9'750'000    |   |  | 0.58      |  |  |              |  |  |                     | 
|Cancellation (repricing)            |  | -            |   |  | -         |  |  |              |  |  |                     | 
|Re-granted (repricing)              |  | -            |   |  | -         |  |  |              |  |  |                     | 
|Granted                             |  | -            |   |  | -         |  |  |              |  |  |                     | 
|Reclassified as warrants            |  | -            |   |  | -         |  |  |              |  |  |                     | 
|Exercised                           |  | -            |   |  | -         |  |  |              |  |  |                     | 
|Forfeited or expired                |  | (1'500'000   | ) |  | 0.70      |  |  |              |  |  |                     | 
|Outstanding at
      March 31, 2011 |  | 8'250'000    |   |  | 0.56      |  |  | 4.97         |  |  | 856'000             | 
|                                    |  |              |   |  |           |  |  |              |  |  |                     | 
|Exercisable at
      March 31, 2011 |  | 5'479'750    |   |  | 0.58      |  |  | 4.81         |  |  | 530'251             | 

A summary of the status of the Companys non-vested options as
of March 31, 2011 and changes during the period is presented below:

|                                |  |                     |   |  | Weighted-average      | 
|------------------------------- |  | ------------------- | - |  | --------------------- | 
|Non-vested options              |  | Shares under option |   |  | grant date fair value | 
|Non-vested at December 31, 2010 |  | 3'220'250           |   |  | 0.34                  | 
|Granted                         |  | -                   |   |  | -                     | 
|Vested                          |  | (450'000            | ) |  | 0.24                  | 
|Forfeited                       |  | -                   |   |  | -                     | 
|Non-vested at March 31, 2011    |  | 2'770'250           |   |  | 0.28                  | 

As of March 31, 2011 the expected total of unrecognized
compensation costs related to unvested stock-option grants was $917,874. We
expect to recognize this amount over a weighted average period of 1.79
years.

7. 2 Share Grants

The Company calculates the fair value of share grants at the
grant date based on the market price at closing. For restricted share grants, we
apply a prorated discount of 12% on the market price of the shares over the
restriction period. The discount rate is an estimate of the cost of capital,
based on previous long-term debt the company has issued.

A summary of the status of the Companys non-vested shares
related to share grants as of March 31, 2011 and changes during the period is
presented below:

|                                |  |         |   |  | Weighted-average      | 
|------------------------------- |  | ------- | - |  | --------------------- | 
|Non-vested shares               |  | Shares  |   |  | grant date fair value | 
|Non-vested at December 31, 2010 |  | 600'000 |   |  | 0.46                  | 
|Granted                         |  | 3'951   |   |  | 0.62                  | 
|Vested                          |  | (3'951  | ) |  | 0.62                  | 
|Forfeited                       |  | -       |   |  | -                     | 
|Non-vested at March 31, 2011    |  | 600'000 |   |  | 0.46                  | 

As of March 31, 2011 the expected total of unrecognized
compensation costs related to unvested share grants was $245,509. We expect to
recognize this amount over a weighted average period of 4.09 years.

7.3. Summary of Stock-based Compensation Expense

A Summary of stock-based compensation expense for the
respective reporting periods is presented in the following table:

---

14

|Three months
      period ended March 31 |  | 2011    |  |  | 2010      | 
|---------------------------------------- |  | ------- |  |  | --------- | 
|Option grants                            |  | 108'339 |  |  | 2'412'161 | 
|Warrant grants                           |  | -       |  |  | -         | 
|Share grants                             |  | 14'696  |  |  | -         | 
|Total                                    |  | 123'035 |  |  | 2'412'161 | 
|Recorded under Personnel                 |  | 98'390  |  |  | 2'254'751 | 
|Recorded under Consulting Fees           |  | 24'644  |  |  | 157'410   | 

8. DEBENTURE

On April 30, 2008, the Company successfully negotiated a
mezzanine tranche of bridge financing and raised $4,000,000 through the issuance
of 4,000 debenture notes (Debentures) of $1,000 each and 1,000,000 detachable
warrants. The warrants are exercisable to purchase the Companys unregistered
common shares at $2.10 per share and will expire on April 30, 2010. The net
proceeds after paying a finders fee were $3,790,000. The Debentures bear an
interest of 8% per annum payable twice a year (June and December) and are due
and payable in full two years from the date of issuance (April 30, 2010). The
Debentures can be prepaid along with any unpaid interest at the Companys
request without prepayment premium or penalty. The Debentures can be converted
into unregistered common shares at any time on demand of the holder at a
conversion price based upon the average price of the 20 days trading price prior
to conversion. The conversion price of 2,000 of the Debentures is subject to a
floor of $1.00 per share. Interest can be paid in the equivalent amount of
unregistered common shares of the Company. If the Company issues shares for
proceeds in excess of $40,000,000, then up to 50% of the proceeds are required
to be used to pay down the Debentures.

The aggregate proceeds received have been allocated between the
detachable warrants and the Debentures on a relative fair value basis.
Accordingly, $240,000 was credited to additional paid in capital with respect to
the warrants.

At the date of issuance the conversion price determined in
accordance with the Debenture agreement was less than the actual share price on
the issuance date. This resulted in a beneficial conversion feature of $557,989,
which has been amortized using the effective interest rate method and recorded
as part of interest expense over the term of the Debenture.

Debt issuance costs of $210,000 were incurred and will be
amortized over the term of the Debentures using the effective interest rate
method.

On March 9, 2010, we have prior to its maturity fully repaid
the principal and interest accrued.

For the three months periods ended March 31, 2011 and 2010 we
accreted the Debentures for the discount, including the beneficial conversion
feature by $0 and $112,821 (i.e. $78,974 accretion of discount and $33,847 loss
on extinguishment of debt), respectively.

9. WARRANTS

As of March 31, 2011 and December 31, 2010, the Company had a
total of 150,000 and 150,000 warrants outstanding to purchase common stock,
respectively. The Company has enough shares of common stock authorized in the
event these warrants are exercised.

The following table summarizes information about the Companys
warrants outstanding as of March 31, 2011:

|Warrant series             |  | # of
      Warrants |  |  | Strike price |  |  | Grant
      date |  |  | Expiry date  | 
|-------------------------- |  | ------------------- |  |  | ------------ |  |  | ---------------- |  |  | ------------ | 
|Grant                      |  | 150'000             |  |  | 0.80         |  |  | June 2, 2010     |  |  | June 2, 2013 | 
|Total warrants outstanding |  | 150'000             |  |  |              |  |  |                  |  |  |              | 

The following table summarizes the Companys warrant activity
for the three-month period ended March 31, 2011:

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15

|                                       |  | Number of warrants     |  |  | # of warrants classifed as |  |  | Total number of warrants |  |  | Weighted-average | 
|-------------------------------------- |  | ---------------------- |  |  | -------------------------- |  |  | ------------------------ |  |  | ---------------- | 
|Warrants                               |  | classifed as liability |  |  | equity                     |  |  | outstanding              |  |  | exercise price   | 
|Outstanding at December 31,
      2010 |  |                        |  |  | 150'000                    |  |  | 150'000                  |  |  | 0.80             | 
|Granted                                |  | -                      |  |  | -                          |  |  | -                        |  |  | -                | 
|Exercised                              |  | -                      |  |  | -                          |  |  | -                        |  |  | -                | 
|Forfeited or expired                   |  | -                      |  |  | -                          |  |  | -                        |  |  | -                | 
|Outstanding at December 31,
      2010 |  | -                      |  |  | 150'000                    |  |  | 150'000                  |  |  | 0.80             | 

For the three-month periods ended March 31, 2011 and 2010 we
recorded in changes in fair value of warrants $0 and $111,242, respectively.

10. CONTINGENTLY CONVERTIBLE LOAN

On August 18, 2008, the Company issued contingently convertible
loans (the Loans) with a principal amount of $2,000,000 and disposed of 8% of
its interest in its operations in Mongolia related to Blocks 13 and 14 for
aggregate proceeds of $2,000,000. The net proceeds after paying finders fee
were $1,860,000. The Company is responsible for the Loan holders share of the
exploration costs attributable to Blocks 13 and 14 through phases 1, 2 and 3,
hereinafter referred to as the Participation Liability.

The Company has allocated part of the gross proceeds to a
Participation Liability for the exploration costs related to the 8% interest in
Blocks 13 and 14 in Mongolia provided to the unit holder. The Company has
estimated that there is a range of costs that could be incurred through
exploration phases 1, 2 and 3. The total minimum estimated spends for phase 1,
the only phase that is currently probable, is $4,000,000 and therefore, a
Participation Liability of $320,000 has been recorded. This liability was
reduced as expenses incurred and amounted to $0 as of December 31, 2009.

The Loans carry an interest rate of 8% per annum and all
principal and accrued interest is payable in full two years from the date of
issuance (August 18, 2010). The Loans are secured by the Groups assets in the
Kyrgyz Republic.

The principal and any accrued but unpaid interest on the Loans
are convertible, in whole or in part, at the option of the holders if the Group
conducts a public offering at the prevailing market price. The loan was
accounted for as a liability in accordance with FASB ASC 480-10-25 (Prior
authoritative literature:FAS150 Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity). Because
the financial instrument embodies a conditional obligation that the Company must
or may settle by issuing a variable number of equity shares and the monetary
value of the obligation is based on a fixed monetary amount known at
inception.

The initial carrying amount of the Loans of $1,680,000 will be
accreted to the redemption amount of $2,000,000 over the term of the loans using
the effective interest method.

On March 9, 2010, we have prior to its maturity fully repaid
the principal and interest accrued.

For the three month periods ended March 31, 2011 and 2010 we
accreted the contingently convertible loan for the discount by $0 and $113,095
(includes $83,202 loss on extinguishment of debt), respectively.

11. PROMISSORY NOTE

On December 5, 2008, the Company borrowed $540,646 from four
Directors at no discount to the principal amount by selling promissory notes to
shareholders (Shareholder Notes). The parties agreed that no interest shall
accrue on the Shareholder Notes unless the Company breaches the repayment
schedule. The repayment of the principal amount of the Shareholder Notes has to
occur if the Company raises greater than $1,000,000 in financing or 90 days
after written demand for repayment by the Shareholder Notes holder, whichever is
first. The Company may also repay any or all principal amount of the Shareholder
Notes at any time without notice, bonus or penalty. In the event that the
Company fails to make a payment when it is due, the Company will pay interest on
the outstanding principal amount of the Shareholder Notes at the rate of 12% per
annum until the Shareholder Notes are paid in full. On May 1, 2009, the Company
received $1,000,000 in financing. Therefore, as the payment falls due
immediately, but so far has not been paid yet, interest is being accrued.

---

16

On March 9, 2010, we have fully repaid the principal of
$540,646 and a total interest accrued of $54,568.

For the three-month periods ended March 31, 2011 and 2010, we
recorded $0 and $11,198 interest expense.

12. SALE OF MANAS ADRIATIC

On February 12, 2010 we signed a formal share purchase
agreement with WWI Resources Ltd. At closing, WWI Resources changed its name to
Petromanas Energy Inc. (Petromanas, TSXV: PMI). On February 24, 2010, we
completed the sale of all of the issued and outstanding shares of Manas Adriatic
to Petromanas.

As consideration for these shares, DWM Petroleum received CAD
$2,000,000 ($1,937,396) in cash on March 3, 2010, $350,000 on May 17, 2010 for
compensation of operational expenses in Albania for January and February 2010
and 100,000,000 Petromanas common shares in addition to the $917,723 advanced
from Petromanas in December 2009. Pursuant to the purchase agreement, DWM
Petroleum was entitled to receive an aggregate of up to an additional
150,000,000 Petromanas common shares as follows:

- 100,000,000 Petromanas common shares upon completion of the first well on
  the Albanian project by Manas Adriatic, or on the date that is 16 months after
  the Closing Date, whichever occurs first;
- 25,000,000 Petromanas common shares if, on or before the tenth anniversary
  of the Closing Date, Manas Adriatic receives a report prepared pursuant to
  Canadas National Instrument 51-101, Standards of Disclosure for Oil and Gas
  Activities, confirming that the Albanian project has 2P reserves of not less
  than 50,000,000 barrels of oil (BOE); and
- if, on or before the tenth anniversary of the Closing Date, Manas Adriatic
  receives a report prepared pursuant to Canadas National Instrument 51-101,
  Standards of Disclosure for Oil and Gas Activities, confirming that the
  Albanian project has 2P reserves in excess of 50,000,000 BOEs, then for each
  50,000,000 BOEs over and above 50,000,000 BOEs, Petromanas will be required to
  issue 500,000 Petromanas common shares to DWM Petroleum to a maximum of
  25,000,000 Petromanas common shares.

In addition, at closing Petromanas funded Manas Adriatic with
$8,500,000 to be used by Manas Adriatic to repay advances made by DWM Petroleum
and its predecessors in respect of the Albanian project. At closing, Petromanas
appointed to its six member board of directors three directors nominated by our
company (Michael Velletta, Heinz Scholz and Peter-Mark Vogel). In addition, and
also at closing, the board of directors of Petromanas appointed Erik Herlyn (our
former Chief Executive Officer) and Ari Muljana (our Chief Financial Officer) as
the Chief Executive Officer and Chief Financial Officer, respectively, of
Petromanas. The assignments of Erik Herlyn as Chief Executive Officer and Ari
Muljana were terminated with effect of July 15, 2010 and August 31, 2010,
respectively.

Contemporaneously with the completion of its purchase of Manas
Adriatic, Petromanas completed a private placement offering in which it sold
100,000,000 of its common shares for gross proceeds of CAD $25,000,000
(approximately $24,518,000). After adjustment for the 100,000,000 common shares
issued to DWM Petroleum at the completion of the sale of Manas Adriatic and the
100,000,000 common shares issued in this private placement, Petromanas had
328,231,466 common shares issued and outstanding, of which DWM Petroleum owned
100,000,000, or approximately 30.47% .

After closing, we analyzed whether we obtained control of
Petromanas by considering undiluted and diluted voting interests, board members,
executive officers, terms of the exchange of equity interest and the relative
size of Petromans and Manas Adriatic. Based on this analysis we concluded
that:

- Manas Petroleum Corporation did not have majority voting interest in
  Petromanas. DWM, a wholly-owned subsidiary of Manas Petroleum Corporation,
  held 100,000,000 outstanding shares of Petromanas, and another 100,000,000
  shares were issuable at the earlier of 16 months or the completion of the
  drilling of the first well in Albania, i.e. DWM held 30.47% or 46.70% of
  Petromanas. We also determined that Manas shareholders did not represent the
  majority shareholders.

---

17

- Manas Petroleum Corporation did not have a majority in the Board, nor does
  it have the ability to appoint, elect or remove a Director.
- Two out of three executive officers were officers of Manas, which due to
  conflicts of interest was subject to change in near future.
- Regarding the terms of the exchange of equity interests we concluded that
  no assessment could be made concerning whether or not a significant premium
  was paid by either party.
- Regarding the relative size of Petromanas and Manas Adriatic, we concluded
  that both entities were small and had not yet generated any revenue and that
  neither one of the entities was significantly larger than the other.

Based on the above, Manas Petroleum Corporation did not obtain
control over Petromanas after closing of the transaction. The transaction
therefore was accounted for in accordance with ASC 810-10-40, which resulted in
a de-recognition of the subsidiary, Manas Adriatic GmbH, in exchange for cash
received, liabilities assumed and 200,000,000 of Petromanas common shares
issued.

The shares of Petromanas are traded on the TSX-V, which we deem
an active market and we therefore believe that the quoted market price of the
Petromanas share (PMI.V) is generally a readily determinable fair value and it
can be taken as a basis for the calculation of the fair value.

We reached this conclusion based on an assessment on the
following criteria:

- The shares are traded in a foreign market of breadth and scope comparable
  to the OTCBB, which according to ASC 820 provides readily determinable fair
  value for equity securities;
- Bid/ask-spreads are narrow; and
- Trading activity is regular and frequent.

Since the shares are held in escrow and are subject to an
escrow release schedule, we deem the shares as a Level 2 input for the
calculation of the fair value in accordance with ASC 820 (fair value
measurements and disclosures). We apply an annual discount rate of 12% on the
quoted market price based on the time before the shares become freely tradable.
The discount rate is an estimate of the cost of capital, based on previous
long-term debt the company has issued. The following table outlines the escrow
release schedule:

|Release Dates | Number of Shares    
|------------- | --------------------
|              | Released from Escrow
|              |                     
|24.06.2010    | 10'000'000          
|24.08.2010    | 15'000'000          
|24.02.2011    | 15'000'000          
|24.06.2011    | 40'000'000          
|24.08.2011    | 30'000'000          
|24.02.2012    | 30'000'000          
|24.08.2012    | 30'000'000          
|24.02.2013    | 30'000'000          
|              |                     
|Total         | 200'000'000         

Each escrowed and issued share entitles Manas Petroleum
Corporation to exercise voting rights and each escrowed and issued share
corresponds to one vote.

The 50,000,000 additional Petromanas common shares which are
issuable upon achievement of certain conditions (see above (i) and (ii)) will be
accounted for in accordance with ASC 450 (Contingencies). As the likelihood of
the contingent events is not reasonably determinable, these shares will only be
recognized when realized.

---

18

A gain on sale of asset is recognized on the statement of
operations under non-operating income and is calculated according to ASC
810-10-40 as the difference between the fair value of the consideration received
and the carrying amount of Manas Adriatic GmbHs assets and liabilities
resulting in a gain on sale of subsidiary:

|                                                                                                                                                   |                                                                                                                                                                                                  | USD                                                      
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------
|Cash                                                                                                                                               | CAD$ 2,000,000                                                                                                                                                                                   | $1'937'396                                               
|Cash Advance Payment                                                                                                                               |                                                                                                                                                                                                  | $917'698                                                 
|Cash Receipt on May 17, 2010                                                                                                                       | compensation for operational
      expenses for January and February in Albania to be borne by Petromanas                                                                                        | $350'000                                                 
|100,000,000 WWI Resources common
      shares received on March 3, 2010                                                                            | 100,000,000 times
      quoted market price at February 25, 2010 of CAD$0.30 (dilution of issuable
      100,000,000 shares below included) discounted by an effective discount of
      16.23%* | CAD$0.30 x 100,000,000                                   
|(USD / CAD : 0.94763 on Feb 25,
      2010) on Feb 25, 2010)                                                                                      
|discounted by 16.23%                                                                                                                              
|                                                                                                                                                  
|$23'815'101                                                                                                                                       
|100,000,000 WWI Resources common
      shares that will be received the latest after 16 months after the Closing
      date and are not contingent | 100,000,000 times
      quoted market price at February 25, 2010 of CAD$0.30 (dilution of issuable
      100,000,000 shares included) discounted by an effective discount of
      20.53%*       | CAD$0.30 x 100,000,000                                   
|(USD / CAD : 0.94763 on Feb 25,
      2010) on Feb 25, 2010)                                                                                      
|discounted by 20.53%                                                                                                                              
|                                                                                                                                                  
|$22'591'720                                                                                                                                       
|50,000,000 WWI Resources common shares
      which are contingent.                                                                                 | These will be accounted for
      under ASC 450 that is an acceptable approach under EITF 09-4. As this is a
      gain contingency it will only be recorded when it can be realized.            | $0                                                       
|Push down of past exploration costs
      incurred as per agreement                                                                                |                                                                                                                                                                                                  | $7'012'222                                               
|Forgiveness of IC payables                                                                                                                         |                                                                                                                                                                                                  | Total liabilities Manas
      Adriatic GmbH $(11,949,704)
|                                                                                                                                                  
|Assumed liabilities by
      Petromanas $8,500,000                                                                                                
|                                                                                                                                                  
|$(3'449'704)                                                                                                                                      
|Net liabilities of Manas Adriatic GmbH as
      of 2/24/2010                                                                                       |                                                                                                                                                                                                  | $4'676'485                                               
|Gain on sale of subsidiary                                                                                                                         |                                                                                                                                                                                                  | $57'850'918                                              

* The quoted market price on February 25, 2010 was CAD $0.39.
In calculating the fair value per share we have taken into account the dilution
effect of the additional 100,000,000 shares that were to be issued 16 months
after the closing date at the latest. Furthermore, the shares are subject to an
escrow agreement and their fair value was therefore discounted based on the
escrow release schedule. The annual interest rate applied to discount the
diluted quoted market price was 12% and represents cost of opportunity at which
the Company may raise debt.

---

19

Net cash proceeds from the sale of Manas Adriatic GmbH amounted
to the total of CAD $2,000,000 ($1,937,396), $8,500,000 to be used by Manas
Adriatic to repay advances made by DWM Petroleum and $350,000 for compensation
of operational expenses in Albania for January and February 2010 reduced by
$21,586, the cash owned by Manas Adriatic consolidated as of February 24,
2010.

13. INVESTMENT IN PETROMANAS

On February 12, 2010, our wholly-owned subsidiary DWM signed a
formal Share Purchase Agreement and completed the sale of all of the issued and
outstanding shares of Manas Adriatic to Petromanas Energy Inc. (Petromanas).
As a result of this transaction, the Company owns 100,000,000 common shares of
Petromanas, received on March 3, 2010, and another 100,000,000 common shares
will be received upon completion of the first well on the Albanian project by
Manas Adriatic, or on the date that is 16 months after the closing date of the
transaction, whichever occurs first.

Pursuant to an Amending Agreement dated May 25, 2010,
Petromanas has issued to DWM an additional 100,000,000 common shares. The shares
are subject to a hold period expiring June 24, 2011 and bear a legend to that
effect.

DWM now has ownership and control over 200,000,000 common
shares of Petromanas and the right to acquire a further 50,000,000 common shares
upon certain conditions. The 200,000,000 common shares represent approximately
31.72% of the issued and outstanding common shares of Petromanas.

Refer to Note 12 for details on the initial measurement of the
shares.

Since the shares are held in escrow and are subject to a hold
period of four and thirteen months, respectively and an escrow release schedule,
we deem the shares a Level 2 input for the calculation of the fair value in
accordance with ASC 820 (Fair value measurements and disclosures). We apply an
annual discount rate of 12% on the quoted market price based on the time before
the shares become freely tradable. The discount rate is an estimate of the cost
of capital, based on previous long-term debt the company has issued.

The quoted market price of Petromanas on March 31, 2011 was
$0.3445.

In order to calculate the fair value of our investment in
Petromanas we discount the market price of the shares based on the escrow
release schedule. The effective discount applied on the quoted market price of
the restricted shares is 7.63% .

During the three-month period ended March 31, 2011, we recorded
$8,620,257 unrealized loss on investment in Petromanas. During the three-month
period ended March 31, 2010 we recorded $28,812,901 unrealized gain on our
investment in Petromanas.

When a company chooses the fair value option, pursuant to ASC
323 further disclosures regarding the investee are required in cases where the
Company has the ability to exercise significant influence over investees
operating and financial policies.

As of today, there is no managerial interchange and there are
no material intercompany transactions. In addition, technological dependencies
do not exist. The majority ownership of the investee is concentrated among a
small group of shareholders who operate the investee without regard to the views
of the investor. The Company made an effort to obtain from Petromanas financial
information that would be needed for the required disclosures, but Petromanas
has refused to provide this information. This information would also be
necessary for the Company to disclose selected financial data of Petromanas in
accordance with US GAAP in timely manner.

The Company has previously requested that Petromanas provide
detailed financial records in order to draw up the reconciliation between
Canadian GAAP and US GAAP but Petromanas refused, stating that Petromanas is a
public company and required to comply with securities legislation and
TSX Venture Exchange rules and it cannot provide selective disclosure to any
shareholder, nor can it permit its results to be publicly disclosed through any
document published by a third party until after it has publicly disseminated the
information.

---

20

Based on all that, the Company concluded that it does not have
the ability to exercise significant influence over investees operating and
financial policies

14. RELATED PARTY DISCLOSURE

The consolidated financial statements include the financial
statements of Manas Petroleum Corporation and the entities listed in the
following table:

|                                                   |  |                       |  |  | Equity share |  |  | Equity share | 
|-------------------------------------------------- |  | --------------------- |  |  | ------------ |  |  | ------------ | 
|Company                                            |  | Country               |  |  | Mar 31, 2011 |  |  | Dec 31, 2010 | 
|DWM Petroleum AG, Baar (1)                         |  | Switzerland           |  |  | 100%         |  |  | 100%         | 
|Manas Petroleum AG, Baar (2)                       |  | Switzerland           |  |  | 100%         |  |  | 100%         | 
|Petromanas Energy Inc., Vancouver (3)              |  | Canada                |  |  | 31.72%       |  |  | 32.29%       | 
|CJSC
      South Petroleum Company, Jalalabat (4)  |  | Kyrgyz
      Republic |  |  | 25%          |  |  | 25%          | 
|CJSC Somon Oil Company, Dushanbe (5)               |  | Rep of Tajikistan     |  |  | 90%          |  |  | 90%          | 
|Manas Petroleum of Chile Corporation, Victoria (6) |  | Canada                |  |  | 100%         |  |  | 100%         | 
|Manas Management Services Ltd., Nassau (7)         |  | Bahamas               |  |  | 100%         |  |  | 100%         | 
|Manas Chile Energia Limitada, Santiago (8)         |  | Chile                 |  |  | 100%         |  |  | 100%         | 
|Gobi Energy Partners LLC, Ulaan Baator (9)         |  | Mongolia              |  |  | 100%         |  |  | 100%         | 
|Gobi
      Energy Partners GmbH (10)               |  | Switzerland           |  |  | 100%         |  |  | 100%         | 

|(1)  | Included Branch in Albania that was sold in February
      2010                                                                                                                                                                                                                                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Founded in 2007                                                                                                                                                                                                                                                                                                                  
|(3)  | Petromanas Energy Inc. participation resulted from
      partial sale of Manas Adriatic GmbH; fair value method applied.                                                                                                                                                                                                         
|(4)  | CJSC South Petroleum Company was founded by DWM Petroleum
      AG; equity method investee that is not consolidated                                                                                                                                                                                                              
|(5)  | CJSC Somon Oil Company was founded by DWM Petroleum
    AG                                                                                                                                                                                                                                                                       
|(6)  | Founded in 2008                                                                                                                                                                                                                                                                                                                  
|(7)  | Founded in 2008                                                                                                                                                                                                                                                                                                                  
|(8)  | Manas Chile Energia Limitada was founded by Manas
      Management Services Ltd.; founded in 2008                                                                                                                                                                                                                                
|(9)  | Gobi Energy Partners LLC was founded in 2009 by DWM
      Petroleum AG (formerly Manas Gobi LLC). DWM Petroleum AG holds record
      title to 100% of Gobi Energy Partners LLC, of which 26% is held in trust
      for others. The Company determined that no value needs to be ascribed to
      the non-controlling interest.
|(10) | Gobi Energy Partners GmbH was founded in
  2010                                                                                                                                                                                                                                                                                  

Ownership and voting right percentages in the subsidiaries
stated above are identical to the equity share.

The following table provides the total amount of transactions,
which have been entered into with related parties for the relevant financial
period:

---

21

|Affiliates                                   |  | Three months period ended |  
|-------------------------------------------- |  | ------------------------- | -
|                                             |  | March 31, 2011            |  
|                                             |  | USD                       |  
|Management services performed to Petromanas* |  | (16'435                   | )

* Services invoiced or accrued and recorded as contra-expense
in personnel cost and administrative cost

|Board of directors                                                                     |  | Three months period ended | 
|-------------------------------------------------------------------------------------- |  | ------------------------- | 
|                                                                                       |  | March 31, 2011            | 
|                                                                                       |  | USD                       | 
|Payments to directors for office rent                                                  |  | 6'000                     | 
|Payments to related companies controlled by directors for rendered consulting services |  | 91'000                    | 
|Interest on
      Promissory notes from directors*                                     |  | -                         | 
|Interest on Promissory notes from former directors*                                    |  | -                         | 

15. COMMITMENTS & CONTINGENT LIABILITIES

Legal actions and claims (Kyrgyz Republic, Republic of
Tajikistan, Chile and Albania)

In the ordinary course of business, the associates,
subsidiaries or branches in the Kyrgyz Republic, Republic of Tajikistan,
Mongolia and Chile may be subject to legal actions and complaints. Management
believes that the ultimate liability, if any, arising from such actions or
complaints will not have a material adverse effect on the financial condition or
the results of future operations of the associates, subsidiaries or branches in
the Kyrgyz Republic, Republic of Tajikistan, Mongolia and Chile.

During the initial phase of applying for our Chilean
Exploration license, a joint bidding group was formed with Manas, IPR and Energy
Focus. Each had a one-third interest. Of its own accord, Energy Focus left the
bidding group. Energy Focus prepared a side letter, which was signed by Manas
and IPR. By the terms of this side letter, Energy Focus was granted the option
to rejoin the consortium under certain conditions.

Even though Energy Focus has been asked many times to join the
group by contributing its prorated share of capital, they have failed to do so.
Despite this, Energy Focus claims that they are entitled to participate in the
consortium at any future time, not just under certain conditions. IPR and Manas
disagree with this interpretation.

Manas and IPR are firmly of the view that Energy Focus no
longer has any right to join the consortium, as the previously agreed-upon
conditions are no longer valid.

Energy Focus commenced litigation for specific performance and
damages in an unspecified amount in Santiago de Chile, claiming interest in the
Tranquilo Block from Manas and IPR, and their subsidiaries. Manas, IPR and their
legal counsel share the view that the Energy Focus claim is entirely without
merit, is brought in the wrong jurisdiction and that they have failed to
properly serve the parties.

At March 31, 2011, there had been no legal actions against the
associates, subsidiaries or branches in the Kyrgyz Republic, Republic of
Tajikistan and Mongolia.

Management believes that the Group, including associates,
subsidiaries or branches in the Kyrgyz Republic, Republic of Tajikistan,
Mongolia and Chile are in substantial compliance with the tax laws affecting its
operations. However, the risk remains that relevant authorities could take
differing positions with regards to interpretative issues.

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22

16. PERSONNEL COSTS AND EMPLOYEE BENEFIT PLANS

Defined benefit plan

The Company maintains a Swiss defined benefit plan for 4 of its
employees. The plan is part of an independent collective fund which provides
pensions combined with life and disability insurance. The assets of the funded
plan are held independently of the Companys assets in a legally distinct and
independent collective trust fund which serves various unrelated employers. The
funds benefit obligations are fully reinsured by AXA Winterthur Insurance
Company. The plan is valued by independent actuaries using the projected unit
credit method. The liabilities correspond to the projected benefit obligations
of which the discounted net present value is calculated based on years of
employment, expected salary increases, and pension adjustments.

|                                |  | Three months period ended |  
|------------------------------- |  | ------------------------- | -
|Pension expense                 |  | March 31, 2011            |  
|                                |  | USD                       |  
|Net service cost                |  | 5'311                     |  
|Interest cost                   |  | 5'254                     |  
|Expected return on assets       |  | (4'517                    | )
|Amortization of net (gain)/loss |  | 2'525                     |  
|Net periodic pension cost       |  | 8'572                     |  

During the three-month periods ended March 31, 2011 and 2010
the Company made cash contributions of $63,368 and approximately $58,300,
respectively, to its defined benefit pension plan. The company does not expect
to make any additional cash contributions to its defined benefit pension plans
during the remainder of 2011.

17. FAIR VALUE MEASUREMENT

FASB ASC 820 (Prior authoritative literature:SFAS 157
Fair Value Measurements) establishes a three-tier fair value hierarchy,
which prioritizes the inputs used in measuring fair value. These tiers include:
Level 1, defined as observable inputs such as quoted prices in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are
either directly or indirectly observable; and Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity
to develop its own assumptions. Financial assets and liabilities carried at fair
value as of March 31, 2011 are classified in one of the three categories as
follows:

|                                     |   | Level 1 |  |  | Level 2    |  |   | Level 3 |  |   | Total      | 
|------------------------------------ | - | ------- |  |  | ---------- |  | - | ------- |  | - | ---------- | 
|                                     |   |         |  |  |            |  |   |         |  |   |            | 
|Assets                               |   |         |  |  |            |  |   |         |  |   |            | 
|Investment in associate (Petromanas) | $ | - $     |  |  | 63'637'625 |  | $ | -       |  | $ | 63'637'625 | 
|Total Assets                         | $ | - $     |  |  | 63'637'625 |  | $ | -       |  | $ | 63'637'625 | 

The following table summarizes the changes in the fair value of
the Companys level 2 financial assets and liabilities for the period ending
March 31, 2011:

|Balance at January 1, 2011                    |  | 72'257'882 |     
|--------------------------------------------- |  | ---------- | ----
|Total gains (losses) realized and unrealized: |  |            |     
|Included in earnings                          |  | (8'620'257 | ) 1)
|Included in other comprehensive income        |  | -          |     
|Purchase, sale, or settlement                 |  | -          |     
|Net transfer in / (out) of level 2            |  | -          |     
|Balance at March 31, 2011                     |  | 63'637'625 |     

1) Recorded in change in fair value of investment in associate
(Petromanas)

---

23

18. EARNINGS PER SHARE

Basic earnings per share result by dividing the Companys Net
Income (or Net Loss) by the weighted average shares outstanding for the
contemplated period. Diluted earnings per share are calculated applying the
treasury stock method. When there is a Net Income, dilutive effects of all
stock-based compensation awards or participating financial instruments are
considered. When the Company posts a loss, basic loss per share equals diluted
loss per share.

The following table depicts how the denominator for the
calculation of basic and diluted earnings per share was determined under the
treasury stock method:

|                                                                                                                                                                                                                                                                                 |  | Three months period ended | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | 
|                                                                                                                                                                                                                                                                                 |  | March 31, 2011            | 
|Basic weighted average shares outstanding                                                                                                                                                                                                                                        |  | 125'862'567               | 
|Effect of common stock equivalents*                                                                                                                                                                                                                                              |  |                           | 
|- stock
      options and non-vested stock                                                                                                                                                                                                                                       |  |                           | 
|under employee
      compensation plans                                                                                                                                                                                                                                          |  | -                         | 
|-
      warrants                                                                                                                                                                                                                                                                 |  | -                         | 
|- contingently convertible loan                                                                                                                                                                                                                                                  |  | -                         | 
|Diluted weighted average shares
      outstanding*                                                                                                                                                                                                                               |  | 125'862'567               | 
|                                                                                                                                                                                                                                                                                 |  |                           | 
|*For periods in
      which losses are presented, dilutive earnings per share calculations do
      not differ from basic earnings per share because the effects of any
      potential common stock equivalents are anti-dilutive and therefore not
included in the calculation

For the three month period ended March 31, 2011 the number of
stock equivalents that was excluded from the computation of diluted earnings per
share was 9,000,000 (i.e. 8,250,000 stock options outstanding, 150,000 warrants
outstanding and 600,000 unvested shares).

19. SHARE PLACEMENT/PURCHASE AGREEMENT  TEMPORARY
EQUITY

On September 26, 2010, we entered into a share
placement/purchase agreement with Alexander Becker, a holder of 14,144,993
shares of our common stock. Mr. Becker expressed an interest in selling all of
his shares of our common stock to a third party or back to our company. The
share placement/purchase agreement provided that in the event any of Mr.
Becker's shares of our common stock are not placed with buyers within 6 months
from September 26, 2010, we will be obligated to purchase such shares from Mr.
Becker 30 days subsequent to March 26, 2011. This purchase deadline can be
extended on mutual consent. The price of the shares was determined by the first
offering. The first offering price was determined on October 25, 2010 pursuant
to a share transfer agreement between Mr. Becker and a third party investor and
amount to $0.39 per share.

As of December 31, 2010 we calculated the exposure, i.e. the
maximum cash obligation of the Company according to ASC 480-10-S99 for all
redeemable shares. The following table shows the Companys exposure, i.e. the
number of redeemable shares and their aggregate value as of December 31,
2010:

|Number of redeemable shares |   | 6'454'993 | 
|--------------------------- | - | --------- | 
|Price to be paid            | $ | 0.39      | 
|Redemption value            | $ | 2'517'447 | 

The Company recognizes changes in the redemption value
immediately as they occur and adjusts the carrying value of the temporary equity
to equal the redemption value at each reporting date. According to ASC
480-10-S99 we classified these redeemable shares under Temporary Equity.

As of February 17, 2011 all remaining shares of Mr. Becker have
been placed with third party investors. The Companys exposure resulting from
the share placement/purchase agreement with Mr. Becker, therefore, is nil as of
March 31, 2011. The following table shows the development of Temporary Equity:

---

24

|Temporary Equity          |  | USD        | 
|------------------------- |  | ---------- | 
|Balance December 31, 2010 |  | 2'517'447  | 
|Redeemable shares         |  | -2'517'447 | 
|Balance March 31, 2011    |  | 0          | 

20. SUBSEQUENT EVENT(S)

On May 6, the Company completed a public offering of units
pursuant to a long form prospectus filed in all of the Provinces of Canada
except Quebec and a registration statement filed with the Securities and
Exchange Commission on Form S-1 in the United States. In the offering, the
Company sold a total of 44,450,500 units at a price of $0.50 per unit for
aggregate gross proceeds of $22,225,250. Each unit consisted of one share of
common stock in the capital of the Company and one common share purchase
warrant, and each warrant entitles the purchaser to purchase one additional
common share until May 6, 2014 at a purchase price of $0.70 per share.

Raymond James Ltd. acted as agent in the offering. As
consideration for its assistance, the Company paid to Raymond James a cash
commission equal to 6.75% of the gross proceeds of the offering and reimbursed
Raymond James for expenses. In addition, the Company issued to Raymond James
agents warrants that entitle Raymond James to purchase up to 1,333,515 shares
of the Companys common stock at a purchase price of $0.60 until May 6,
2013.

Concurrently with the completion of the offering, the Company
has been listed as a Tier 2 Oil and Gas issuer on the TSX Venture Exchange.
Shares of the Companys common stock will trade on the TSX Venture Exchange
under the symbol MNP and the warrants issued in the offering will trade on the
TSX Venture Exchange under the symbol MNP.WT. The Company will retain its
current listing on the OTC Bulletin Board but the warrants will trade only on
the TSX Venture Exchange.

---

25

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

Forward-Looking Statements

This quarterly report contains forward-looking statements.
Forward-looking statements are statements that relate to future events or future
financial performance. In some cases, you can identify forward-looking
statements by the use of terminology such as may, should, intend,
expect, plan, anticipate, believe, estimate, project, predict,
potential, or continue or the negative of these terms or other comparable
terminology. These statements speak only as of the date of this quarterly
report. Examples of forward-looking statements made in this quarterly report
include statements pertaining to, among other things:

- managements assessment that our company is a going concern;
- the quantity of potential natural gas and crude oil resources;
- potential natural gas and crude oil production levels;
- capital expenditure programs;
- projections of market prices and costs;
- supply and demand for natural gas and crude oil;
- our need for, and our ability to raise, capital; and
- treatment under governmental regulatory regimes and tax laws.

The material assumptions supporting these forward-looking
statements include, among other things:

- our ability to sell some of the 200,000,000 common shares of Petromanas
  Energy Inc. held by us at or around CAD$0.3350 (approximately $0.3445) per
  share, the quoted market price of these shares on March 31, 2011, as and when
  needed;
- our monthly burn rate of approximately $290,000 for our operating costs
  (excluding geological & geophysical expenses);
- our ability to obtain any necessary financing on acceptable terms;
- timing and amount of capital expenditures;
- our ability to obtain necessary drilling and related equipments in a timely
  and cost-effective manner to carry out exploration activities;
- our venture partners successful and timely performance of their
  obligations with respect to the exploration programs in which we are involved;
- retention of skilled personnel;
- the timely receipt of required regulatory approvals;
- continuation of current tax and regulatory regime;

---

26

- current exchange rate and interest rates; and
- general economic and financial market conditions.

Although management considers these assumptions to be
reasonable based on information currently available to it, they may prove to be
incorrect.

These forward-looking statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including:

- our ability to establish or find resources or reserves;
- our need for, and our ability to raise, capital;
- volatility in market prices for natural gas and crude oil;
- liabilities inherent in natural gas and crude oil operations;
- uncertainties associated with estimating natural gas and crude oil
  resources or reserves;
- competition for, among other things, capital, resources, undeveloped lands
  and skilled personnel;
- political instability or changes of laws in the countries in which we
  operate and risks of terrorist attacks;
- incorrect assessments of the value of acquisitions;
- geological, technical, drilling and processing problems; and
- other factors discussed under the section entitled Risk Factors in our
  annual report on Form 10-K filed on March 21, 2011.

These risks, as well as risks that we cannot currently
anticipate, could cause our companys or our industrys actual results, levels
of activity or performance to be materially different from any future results,
levels of activity or performance expressed or implied by these forward-looking
statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity or performance. Except as required by applicable law,
including the securities laws of the United States and Canada, we do not intend
to update any of the forward-looking statements to conform these statements to
actual results.

As used in this quarterly report, the terms we, us, and
our refer to Manas Petroleum Corporation, its wholly-owned subsidiaries DWM
Petroleum AG, a Swiss company, Manas Petroleum AG, a Swiss company, Manas
Energia Chile Limitada, a Chilean company, Manas Petroleum of Chile Corporation,
a Canadian company, and Manas Management Services Ltd., a Bahamian company, and
its partially owned subsidiaries CJSC Somon Oil Company, a Tajikistan company,
Gobi Energy Partners GmbH, a Swiss company, and Gobi Energy Partners LLC, a
Mongolian company, and its 25% ownership interest in CJSC South Petroleum
Company, a Kyrgyz company and its 31.7% ownership interest in Petromanas Energy
Inc., a British Columbia company listed on the TSX Venture Exchange in Canada
(TSXV: PMI), as the context may require.

The following discussion and analysis provides a narrative
about our financial performance and condition that should be read in conjunction
with the unaudited consolidated financial statements and related notes thereto
included in this quarterly report.

---

27

Overview of Business Operations

We are in the business of exploring for oil and gas, primarily
in Central and East Asia. In particular, we focus on the exploration of large
under-thrust light oil prospects in areas where, though there has often been
shallow production, their deeper potential has yet to be evaluated. If we
discover sufficient reserves of oil or gas, we intend to exploit them. Although
we are currently focused primarily on projects located in certain geographic
regions, we remain open to attractive opportunities in other areas. We do not
have any known reserves on any of our properties.

We carry out our operations both directly and through
participation in ventures with other oil and gas companies. We are involved in
projects in Mongolia and Tajikistan and we were recently involved in a project
in Chile. In addition, we own shares of Petromanas Energy Inc., which is
involved in oil and gas activities in Albania, and shares of CJSC South
Petroleum Company, which is involved in a project in the Kyrgyz Republic.

We have no operating income yet and, as a result, depend upon
funding from various sources to continue operations and to implement our growth
strategy.

Results of Operations

The Three-Month Period Ended March 31, 2011 Compared to the
Three-Month Period Ended March 31, 2010

Net loss for the three-month period ended March 31, 2011 was
$9,876,323 as compared to net income of $83,011,315 for the same period in 2010.
This is a decrease of $92,887,638 and is mainly related to our investment in
Petromanas. For the three months period ended March 31, 2011, we recorded a
decrease in fair value of investment in associate of $8,620,257. In the three
month period ended March 31, 2010 we recorded an initial gain from sale of
subsidiary (Manas Adriatic) of $57,850,918 and a subsequent increase in fair
value of investment in associate (Petromanas) of $28,812,901. Operating Expenses
for the three-month period ended March 31, 2011 decreased to $1,222,370 from
$3,241,960 reported for the same period in 2010. This decrease of 62% or
$2,019,590 in our total operating expenses is mainly attributable to lower
stock-based compensation expenses in personnel costs and consulting fees.

Personnel costs

For the three-month period ended March 31, 2011 our personnel
costs decreased to $367,002 from $2,501,193 for the same period in 2010. This
decrease of 85% or $2,134,191 is mainly attributable to lower charges related to
equity awards granted under the stock compensation and stock option plans. For
such grants $98,390 were recorded for the three month period ended March 31,
2011 versus $2,412,161(including $1,441,321 due to re-pricing of stock options)
for the same period in 2010.

Exploration costs

For the three-month period ended March 31, 2011 we incurred
exploration costs of $253,540 as compared to $63,657 for the same period in
2010. This increase of 298% or $189,883 is mainly attributable to higher
exploration costs in Mongolia.

Consulting fees

For the three-month period ended March 31, 2011 we expensed in
consulting fees $272,408 as compared to consulting fees of $417,423 for the same
period in 2010. This is a decrease of 35% or $145,016 and mainly attributable to
lower stock based compensation expenses for consultants.

Administrative costs

For the three-month period ended March 31, 2011, we recorded
administrative costs of $315,970 compared to $243,477 for the same period in
2010. This increase of 30% and $72,493 is mainly attributable to higher expenses
for accounting and travel.

---

28

Non-operating income/expense

For the three month period ended March 31, 2011 we recorded a
non-operating expense of $8,655,296 compared to a non-operating income of
$86,254,285 for the same period in 2010. This is a decrease of $94,909,582. For
the three month period ended March 31, 2011, we recorded a decrease in fair
value of investment in associate of $8,620,257. In the same period for 2010 we
recorded a gain from sale of subsidiary of $57,850,918 and an increase in fair
value in associate of $28,812,901 (together $86,663,819).

Liquidity and Capital Resources

Our cash balance as of March 31, 2011 was $399,931. Our total
current assets as of March 31, 2011 amounted to $774,699 and total current
liabilities were $608,409 resulting in net working capital of $166,290.

Of the 200,000,000 common shares of Petromanas held by us,
40,000,000 were freely tradable as of March 31, 2011. The market value of these
freely tradable shares was approximately $13,780,000.

Shareholders equity as of March 31, 2011 was $64,487,643.

On May 6, 2011, we completed a public offering of units
pursuant to a long form prospectus filed in all of the Provinces of Canada
except Quebec and a registration statement on Form S-1 filed with the Securities
and Exchange Commission in the United States. In the offering, we sold a total
of 44,450,500 units at a price of $0.50 per unit for aggregate gross proceeds of
$22,225,250. Each unit consisted of one share of common stock in the capital of
our company and one common share purchase warrant, and each warrant entitles the
purchaser to purchase one additional common share until May 6, 2014 at a
purchase price of $0.70 per share.

We expect that the proceeds from the public offering are
sufficient to implement our business plan for the next 12 months.

Also on May 6, 2011, shares of our common stock and all of the
unit warrants sold in the public offering were listed on the TSX Venture Stock
Exchange.

Cash Flows

|Three Months Ended                                    |  | March 31   |  
|----------------------------------------------------- |  | ---------- | -
|                                                      |  | 2011       |  
|                                                      |  |            |  
|Net Cash (used in) Operating Acticities               |  | (883'223   | )
|Net Cash provided by (used in ) Investing Activities  |  | (506       | )
|Net Cash provided by (used in ) Financing Activities  |  | (428'365   | )
|                                                      |  |            |  
|Change in Cash and Cash Equivalents during the Period |  | (1'312'094 | )

Operating Activities

Net cash used in operating activities of $883,223 for the
three-month period ended March 31, 2011 changed from net cash used of $2,162,485
for the same period in 2010. This decrease in net cash used in operating
activities of $1,279,262 is mainly attributable to changes in accrued expenses
(decrease of $36,975 versus increase of $(633,434)) and a decrease in
receivables and prepaid expenses (decrease of $80,403 versus increase of
$(342,199)).

Investing Activities

Net cash used in investing activities of $506 for the
three-month period ended March 31, 2011 changed from net cash provided by
investing activities of $10,388,802 for the same period in 2010. This decrease
in cash flow provided by investing activities of $10,389,308 is mainly
attributable to proceeds from sale of investment of $10,415,810 recorded in the
three month period ended March 31, 2010.

---

29

Financing Activities

Net cash used in financing activities of $428,365 for the
three-month period ended March 31, 2011 changed from net cash used of $6,648,300
for the same period in 2010. Net cash was used for prepaid issuance costs in
connection with our public offering for the three month period ended March 31,
2011. During the three-month period ended March 31, 2010 cash was used to repay
contingently convertible loans (i.e. $2,000,000), debentures (i.e. $4,000,000),
promissory notes to shareholders (i.e. $540,646) and to settle a bank overdraft
of $196,154. Proceeds from exercise of warrants of $88,500 positively affected
cash used in financing activities for the three-month period ended March 31,
2010.

Cash Requirements

The following table outlines the estimated cash requirements
for our operations for the next 12 months.

|Expense                                         |  | Amount    | 
|----------------------------------------------- |  | --------- | 
|Geological & Geophysical                        |  | 4'590'000 | 
|General & Administrative                        |  | 2'600'000 | 
|Legal                                           |  | 410'000   | 
|Audit                                           |  | 120'000   | 
|Marketing                                       |  | 340'000   | 
|Total Expenses
      planned for next 12 months |  | 8'060'000 | 

Our monthly burn rate (excluding Geological & Geophysical)
amounts to approximately $290,000. We have more than enough money to fund our
planned operations for the next 12 months.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Recent Developments

Since the end of our most recent fiscal year, following
developments have affected our operations or operations of the companies in
which we participate.

Mongolia

On November 10, 2010, we announced the completion of the 2010
seismic acquisition program for block 13 and 14 without incident. We intend to
use the additional 300 km of 2D seismic data to improve our technical database
and our chance of drilling a successful exploration well. After interpretation
of the full dataset, we intend to decide regarding additional seismic to be
acquired in 2011; drilling for the first well is planned for the first half of
2012.

Ferghana projects (Tajikistan, Kyrgyz Republic)

General

The following activities were performed for both projects:

-	Regional cross-section preparation

-	Fergana regional geology

-	Updated/improved Fergana fields directory

-	Maintain/Improve well, seismic, map etc database

-	Prepare for and present to external Auditor Gustavson and associates – assist in report preparation.

---

30

Tajikistan

Somon Oil, in which we hold a 90% interest, contracted the
Kazak crew Dank to perform a seismic project, which commenced on February 13,
2010 in the southern license areas and locally across the Kyrgyz-Tajik border.
This seismic acquisition was completed on June 4, 2010. Data quality is
generally good to excellent. Technical database compilation and integration is
ongoing. Reprocessing of 470km of 2007-2008 seismic in conjunction with the new
data is proceeding.

A production sharing agreement has been drafted and submitted
to the Tajik Ministry of Energy. We continue to negotiate the form of the
production sharing agreement with various interested agencies of the government
of Tajikistan. We believe that the finalization and ratification of the
production sharing agreement is the last hurdle in order for Santos
International Ventures Pty Ltd. to exercise its farm-in option.

Kyrgyz Republic

South Petroleum Company, a closely held Kyrgyz company in which we own a 25% minority equity interest, continued its geological studies within the four license areas owned by it.  Although we do not direct management of South Petroleum Company and we are not the operator of its project, we do receive periodic updates on the status of that project from the operator.

The following activities were performed during the three month ended March 31, 2011:

-	No Health and Safety Incidents during the 1st Quarter

-	Ongoing work on administration of SPC offices both in Bishkek and Jalalabat;

-	Digitizing old geological data: old drilling reports and seismic data;

-	Integration of present geological and geophysical data;

-	Drilling meetings commenced in support of Tajikistan Drilling.:

-	Reviewing all previous services and supply contracts for conformity and use in the year 2011;

-	Working through the supply routes: Kazakhstan, China to Kyrgyzstan etc.;

-	Reviewing and commenting on the new draft laws on Subsoil, Licensing, Somon Oil PSA, etc.;

-	Reviewing tax legislation and applicability to SPC operations;

-	Support in preparation of the draft PSA for Somon-Tajik;

-	Support in meetings held in Dushanbe on the PSA: translation of documents and meetings;

-	Submitted SPC’s annual report to the Ministry of Geology on all of SPC’s license areas

-	Obtained Ministry of Energy approval for all  Year End reports and program deferrals.

Information provided in this quarterly report pertaining to the exploration project in the Kyrgyz Republic owned by South Petroleum Company has been provided to our company by the operator of that project, with which we deal at arms length, and is included in this quarterly report in an effort to share that information with the public.  Although we have no reason to doubt the accuracy of this information, we expressly disclaim responsibility therefor and make no representation or warranty that it is complete or correct.

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31

Chile

On January 29, 2010, we signed an agreement to assign our
interest in our Chilean project in exchange for a return of all of the money
that we have invested in this project to date (i.e. approximately $70,000) and
relief from all currently outstanding and future obligations in respect of the
project. This agreement and the assignment of our interest in this project have
been approved by the Ministry of Energy in Chile. The transfer of our
participation in this project to the new owners is now subject to approval by
the parties.

Item 3. Quantitative and Qualitative Disclosures about
Market Risk.

Not applicable.

Item 4T. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as that term
is defined in Rule 13a-15(e), promulgated by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934. Disclosure controls
and procedures include controls and procedures designed to ensure that
information required to be disclosed in our companys reports filed under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commissions
rules and forms, and that such information is accumulated and communicated to
our management, including our principal executive officer and our principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure.

As required by paragraph (b) of Rules 13a-15 under the
Securities Exchange Act of 1934, our management, with the participation of our
principal executive officer and our principal financial officer, evaluated our
companys disclosure controls and procedures as of the end of the period covered
by this quarterly report. Based on this evaluation, our principal executive
officer and our principal financial officer concluded that as of the end of the
period covered by this quarterly report, our disclosure controls and procedures
were effective.

Changes in Internal Control over Financial
Reporting

There were no changes in our internal control over financial
reporting during the fiscal quarter ended March 31, 2011 that have materially
affected, or are reasonably likely to materially affect our internal control
over financial reporting.

PART IIOTHER INFORMATION

Item 1. Legal Proceedings.

Except as disclosed below, there are no pending legal
proceedings to which our company or any of our subsidiaries is a party or of
which any of our properties, or the properties of any of our subsidiaries, is
the subject. In addition, we do not know of any such proceedings contemplated by
any governmental authorities.

Litigation in Chile

Energy Focus commenced litigation for specific performance and
damages in an unspecified amount in Santiago Chile, claiming an interest in the
Tranquillo Block from our company and IPR, and their subsidiaries.

Factual Allegations

During the initial phase of applying for our Chilean
Exploration license, a joint bidding group was formed with our company, IPR and
Energy Focus. Each had a one-third interest. Of its own accord, Energy Focus
left the bidding group. Energy Focus prepared a side letter, which was signed by
our company and IPR. By the terms of this side letter, Energy Focus was granted
the option to rejoin the consortium under certain conditions.

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32

Even though Energy Focus has been asked many times to join the
group by contributing its prorated share of capital, they have failed to do so.
Despite this, Energy Focus claims that they are entitled to participate in the
consortium at any future time, not just under certain conditions. IPR and we
disagree with this interpretation.

We and IPR are firmly of the view that Energy Focus no longer
has any right to join the consortium, as the previously agreed-upon conditions
are no longer valid. Our company, IPR and their legal counsel share the view
that the Energy Focus claim is entirely without merit, is brought in the wrong
jurisdiction and that they have failed to properly serve the parties.

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

On April 1, 2011, we issued 2,131 shares for services performed
during the month of March 2011 pursuant to a consulting agreement entered into
on December 7, 2010 with a consultant to provide our company with business
opportunities in petroleum exploration and development. We issued these shares
to one non-U.S. person (as that term is defined in Regulation S of the
Securities Act of 1933) in an offshore transaction in which we relied on the
registration exemption provided for in Regulation S and/or Section 4(2) of the
Securities Act of 1933.

Item 3. Defaults upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None.

Item 6. Exhibits.

|Exhibit Number | Description                                                                                                                                                                                                                                                                     
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)            | Underwriting Agreement                                                                                                                                                                                                                                                          
|1.1            | Agency Agreement dated May 2, 2011 with Raymond James
      Ltd. (incorporated by reference to an exhibit to our Current Report on
      Form 8-K filed on May 9, 2011)                                                                                                         
|(3)            | Articles of Incorporation and Bylaws                                                                                                                                                                                                                                            
|3.1            | Articles of Incorporation (incorporated by reference to
      an exhibit to our Registration Statement on Form SB-2 filed on July 14,
      2003)                                                                                                                               
|3.2            | Certificate of Amendment to Articles of Incorporation of
      Express Systems Corporation filed on April 2, 2007 (changing name to Manas
      Petroleum Corporation) (incorporated by reference to an exhibit to our
      Current Report on Form 8-K filed on April 17, 2007)
|3.3            | Amended and Restated Bylaws (incorporated by reference to
      an exhibit to our Current Report on Form 8-K filed on June 15, 2009)                                                                                                                                            
|(4)            | Instruments Defining the Rights of Security Holders,
      including Indentures                                                                                                                                                                                                 
|4.1            | Form of Debenture (incorporated by reference to an
      exhibit to our Current Report on Form 8-K filed on May 16, 2008)                                                                                                                                                       
|4.2            | Form of Loan Agreement (incorporated by reference to an
      exhibit to our Current Report on Form 8-K filed on August 25, 2008)                                                                                                                                               
|4.3            | Warrant Indenture dated May 6, 2011 with Equity Financial
      Trust Company (incorporated by reference to an exhibit to our Current
      Report on Form 8-K filed on May 9, 2011)                                                                                            

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33

|Exhibit Number | Description                                                                                                                                                                                                                                                              
|-------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10)           | Material Contracts                                                                                                                                                                                                                                                       
|10.1           | Share Exchange Agreement, dated November 23, 2006
      (incorporated by reference to an exhibit to our Current Report on Form 8-K
      filed on April 17, 2007)                                                                                                        
|10.2           | Farm-In Agreement, dated October 4, 2006 (incorporated by
      reference to an exhibit to our Current Report on Form 8-K filed on April
      17, 2007)                                                                                                                 
|10.3           | Letter Agreement  Phase 2 Work Period with Santos
      International Operations Pty. Ltd, dated July 28, 2008 (incorporated by
      reference to an exhibit to our Annual Report on Form 10-K filed on April
      15, 2009)                                          
|10.4           | Side Letter Agreement  Phase 1 Completion and Cash
      Instead of Shares with Santos International Holdings Pty Ltd., dated
      November 24, 2008 (incorporated by reference to an exhibit to our Annual
      Report on Form 10-K filed on April 15, 2009)         
|10.5           | 2007 Revised Omnibus Plan (incorporated by reference to
      an exhibit to our Annual Report on Form 10- K filed on April 15, 2009)                                                                                                                                     
|10.6           | Promissory note issued to Heinz Scholz dated December 5,
      2008 (incorporated by reference to an exhibit to our Quarterly Report on
      Form 10-Q/A filed on July 24, 2009)                                                                                        
|10.7           | Promissory Note issued to Peter-Mark Vogel dated December
      5, 2008 (incorporated by reference to an exhibit to our Quarterly Report
      on Form 10-Q/A filed on July 24, 2009)                                                                                    
|10.8           | Promissory note issued to Alexander Becker dated December
      5, 2008 (incorporated by reference to an exhibit to our Quarterly Report
      on Form 10-Q/A filed on July 24, 2009)                                                                                    
|10.9           | Promissory note issued to Michael J. Velletta dated
      December 5, 2008 (incorporated by reference to an exhibit to our Quarterly
      Report on Form 10-Q/A filed on July 24, 2009)                                                                                 
|10.10          | Consulting Frame Contract with Varuna AG dated February
      1, 2009 (incorporated by reference to an exhibit to our Quarterly Report
      on Form 10-Q/A filed on July 24, 2009)                                                                                      
|10.11          | Termination Agreement with Thomas Flottmann dated January
      31, 2009 (incorporated by reference to an exhibit to our Quarterly Report
      on Form 10-Q/A filed on July 24, 2009)                                                                                   
|10.12          | Amendment to the Notice with Terms and Condition for the
      Termination of Employment Agreement with Rahul Sen Gupta dated February
      26, 2009 (incorporated by reference to an exhibit to our Quarterly Report
      on Form 10-Q/A filed on July 24, 2009)      
|10.13          | Amendment to the Termination Agreement with Rahul Sen
      Gupta dated March 31, 2009 (incorporated by reference to an exhibit to our
      Quarterly Report on Form 10-Q/A filed on July 24, 2009)                                                                     
|10.14          | Termination Agreement with Peter-Mark Vogel dated January
      30, 2009 (incorporated by reference to an exhibit to our Quarterly Report
      on Form 10-Q/A filed on July 24, 2009)                                                                                   
|10.15          | Consulting Frame Contract with Peter-Mark Vogel dated
      March 26, 2009 (incorporated by reference to an exhibit to our Quarterly
      Report on Form 10-Q/A filed on July 24, 2009)                                                                                 
|10.16          | Production Sharing Contract for Contract Area Tsagaan
      Els-XIII between the Petroleum Authority of Mongolia and DWM Petroleum
      (incorporated by reference to an exhibit to our Quarterly Report on Form
      10-Q/A filed on July 24, 2009)                   
|10.17          | Production Sharing Contract for Contract Area
      Zuunbayan-XIV between the Mineral Resources and Petroleum Authority of
      Mongolia and DWM Petroleum (incorporated by reference to an exhibit to our
      Quarterly Report on Form 10-Q/A filed on July 24, 2009)
|10.18          | Letter from AKBN regarding Production Sharing Contracts
      for Blocks A-B and D-E dated May 5, 2009 (incorporated by reference to an
      exhibit to our Quarterly Report on Form 10-Q/A filed on July 24, 2009)                                                     
|10.19          | Employment Agreement between Ari Muljana and Manas
      Petroleum Corporation dated April 1, 2009 (incorporated by reference to an
      exhibit to our Registration Statement on Form S-1 filed on July 30, 2009)                                                      
|10.20          | Consultancy Agreement dated November 21, 2008 with Dr.
      Richard Schenz (incorporated by reference to an exhibit to our Current
      Report on Form 8-K filed on August 13, 2009)                                                                                   
|10.21          | Letter of Intent with Petromanas Energy Inc. (formerly
      WWI Resources Ltd.) dated November 19, 2009 (incorporated by reference to
      an exhibit to our Quarterly Report on Form 10-Q filed on November 23,
      2009)                                           

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34

|Exhibit Number | Description                                                                                                                                                                                                                                                                                                              
|-------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.22          | Share Purchase Agreement dated February 12, 2010 between
      Petromanas Energy Inc. (formerly WWI Resources Ltd.), DWM Petroleum AG and
      Petromanas Albania GmbH (formerly Manas Adriatic GmbH) (incorporated by
      reference to an exhibit to our Current Report on Form 8-K filed on
      February 25, 2010)
|10.23          | Form of Stock Option Agreement (Investor Relations)
      (incorporated by reference to an exhibit to our Annual Report on Form 10-K
      filed on March 18, 2010)                                                                                                                                                      
|10.24          | Form of Stock Option Agreement (Non-Investor Relations)
      (incorporated by reference to an exhibit to our Annual Report on Form 10-K
      filed on March 18, 2010)                                                                                                                                                  
|10.25          | Agreement dated January 29, 2010 relating to the
      assignment of the interest in the Chilean project (incorporated by
      reference to an exhibit to our Annual Report on Form 10-K filed on March
      18, 2010)                                                                                                 
|10.26          | Termination Agreement dated July 31, 2010 with Erik
      Herlyn (incorporated by reference to an exhibit to our Quarterly Report on
      Form 10-Q filed on August 16, 2010)                                                                                                                                           
|10.27          | Agreement between Gobi Energy Partners LLC and DQE
      International Tamsag (Mongol) LLC (incorporated by reference to an exhibit
      to our Current Report on Form 8-K filed on September 7, 2010)                                                                                                                  
|10.28          | Appointment as Director dated September 16, 2010 by Dr.
      Werner Ladwein (incorporated by reference to an exhibit to our Quarterly
      Report on Form 10-Q filed on November 15, 2010)                                                                                                                             
|10.29          | Share Placement/Purchase Agreement dated September 26,
      2010 with Alexander Becker (incorporated  by reference to an
      exhibit to our Quarterly Report on Form 10-Q filed on November 15, 2010)                                                                                                                 
|10.30          | Employment and Non-Competition Agreement dated October 1,
      2010 with Peter-Mark Vogel (incorporated by reference to an exhibit to our
      Quarterly Report on Form 10-Q filed on November 15, 2010)                                                                                                               
|10.31          | Cooperation Agreement dated November 5, 2010 with
      Shunkhlai Group LLC (incorporated by reference to an exhibit to our
      Current Report on Form 8-K filed on December 2, 2010)                                                                                                                                  
|10.32          | Form of Lock-Up Agreement with Raymond James Ltd. and
      executive officers and directors (incorporated by reference to an exhibit
    to our Registration Statement on Form S-1/A filed on April 28, 2011)                                                                                                           
|10.33          | Escrow Agreement dated May 3, 2011 with Equity Financial
      Trust Company and our officers and directors (incorporated by reference to
    an exhibit to our Current Report on Form 8-K filed on May 9, 2011)                                                                                                         
|(14)           | Code of Ethics                                                                                                                                                                                                                                                                                                           
|14.1           | Code of Ethics, adopted May 1, 2007 (incorporated by
      reference to an exhibit to our Registration Statement on Form SB-2 filed
      on November 21, 2007)                                                                                                                                                          
|(31)           | Rule 13a-14 Certifications                                                                                                                                                                                                                                                                                               
|31.1*          | Section 302 Certification of Chief Executive Officer                                                                                                                                                                                                                                                                     
|31.2*          | Section 302 Certification of Chief Financial Officer                                                                                                                                                                                                                                                                     
|(32)           | Section 1350 Certifications                                                                                                                                                                                                                                                                                              
|32.1*          | Section 906 Certification of Chief Executive Officer                                                                                                                                                                                                                                                                     
|32.2*          | Section 906 Certification of Chief Financial Officer                                                                                                                                                                                                                                                                     
|(99)           | Additional Exhibits                                                                                                                                                                                                                                                                                                      
|99.1           | Audit Committee Charter (incorporated by reference to an
      exhibit to our Registration Statement on Form S-1 filed on February 2,
2011)                                                                                                                                                                              

* Filed herewith.

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35

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

| | MANAS PETROLEUM CORPORATION                                         
| | --------------------------------------------------------------------
| | By:
      /s/ Peter-Mark Vogel                                      
| | Peter-Mark Vogel                                                    
| | Chief Executive Officer and President                               
| | (Principal Executive Officer)                                       
| | Date: May 13, 2011                                                  
| |                                                                     
| | By:
      /s/ Ari Muljana                                           
| | Ari Muljana                                                         
| | Chief Financial Officer and Treasurer                               
| | (Principal Financial Officer and Principal
      Accounting Officer)
| | Date: May 13, 2011                                                  

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