---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington D. C. 20549

FORM 10-Q /A(Amendment
  No. 1)

QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended September
30, 2008Commission file number 333-107002

Manas Petroleum
Corporation(Exact name of small business issuer as specified
in its charter)

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

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

+41 (44) 718 10 30(Issuer's telephone number)

Check whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 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. Yes [x] 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. (Check one):

|Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [ ] | 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 [ ] No [x]

The number of shares of outstanding common stock of Manas Petroleum
  Corporation, which is the only class of its common equity, on November [14] ,
  2008, was 117,570,122.

---

This Amendment
  No. 1 to the Quarterly Report on Form 10-Q for the quarter ended September 30,
  2008 of Manas Petroleum Corporation (the Company) amends and restates
  in their entirety Items 1, 2, 3 and 4 of Part I and Item 6 of Part II of the
  Quarterly Report on Form 10-Q of the Company filed with the Securities and Exchange
  Commission on November 14, 2008. This Amendment No. 1 corrects errors recently
  discovered by the Company as described below.

Except for
  the correction of these recently discovered errors, this Amendment No. 1 to
  our Quarterly Report on Form 10-Q/A does not update any disclosure from, or
  reflect any event occurring subsequent to, November 14, 2008, which is the filing
  date of the original report on Form 10-Q.

On March 31,
  2009, the Company concluded that its previously issued financial statements
  as filed in its Form 10-Q for the quarterly period ended September 30, 2008
  should no longer be relied upon because of errors in the those financial statements
  and should be restated to reflect necessary accounting adjustments. The adjustments
  do not affect the Companys reported revenues, its cash flows or its cash/liquidity
  position.

In accordance
  with accounting principles generally accepted in the United States of America
  (US GAAP) the Company should have amortized the discount resulting
  from recording a beneficial conversion feature of $557,989 arising upon the
  issuance of convertible debentures on April 30, 2008 over the two year term
  to the stated redemption date using the effective interest rate method. However,
  in error the Company expensed the entire beneficial conversion feature in the
  quarter ended June 30, 2008.

In addition,
  as a result of the subsequent equity sales adjustment clause included in most
  of the Companys warrant agreements, the private placement on September
  4, 2008 caused the Company to reprice 13,933,989 warrants to the last equity
  issuance price ($0.59) and increase the number of common shares to be issued
  upon exercise of the warrants to 69,966,703. The resulting repricing is considered
  to be a cancellation of the original warrant agreements and the issuance of
  new warrants agreements. The accounting impact is to record an expense for the
  difference in the fair value of the new warrant agreements and the fair value
  of the original warrant agreements immediately prior to the adjustment. The
  result is a charge of $9,439,775 recorded in the quarter ended September 30,
  2008 and a corresponding increase to additional paid in capital.

For a discussion
  of the restatement adjustments refer to Note 19 of the unaudited condensed consolidated
  financial statements presented herein.

1

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Item 1. Financial Statements

|Description                                                                                                                                                                                                                                              | Page
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                                                                                                                         | No. 
|FINANCIAL INFORMATION:                                                                                                                                                                                                                                   |     
|                                                                                                                                                                                                                                                         |     
|Unaudited Condensed Consolidated Financial Statements                                                                                                                                                                                                    |     
|                                                                                                                                                                                                                                                         |     
|Condensed
        Consolidated Balance Sheets at September 30, 2008 (as
        restated) and December 31, 2007                                                                                                                                          | 3   
|                                                                                                                                                                                                                                                         |     
|Condensed
        Consolidated Statement of Operations for the Three and Nine Months Ended
        September 30, 2008 (as
        restated) and 2007 and for the Period From Inception, May 25, 2004
        to September 30, 2008 (as
        restated) | 4   
|                                                                                                                                                                                                                                                         |     
|Condensed
        Consolidated Statements of Cash Flows for the Nine Months Ended September
        30, 2008 (as restated)
        and 2007 and for the Period From Inception, May 25, 2004 to September
        30, 2008 (as restated)                  | 5   
|                                                                                                                                                                                                                                                         |     
|Condensed Consolidated Statement of Shareholders
        Equity/(Deficit)                                                                                                                                                                               | 6   
|                                                                                                                                                                                                                                                         |     
|Condensed Notes to Condensed Consolidated
        Financial Statements                                                                                                                                                                                   | 7   

2

---

|MANAS PETROLEUM CORPORATION                
|-------------------------------------------
|(A DEVELOPMENT STAGE COMPANY)              
|CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|UNAUDITED                                  
|                                           
|                                           
|CONDENSED CONSOLIDATED BALANCE SHEETS      

|                                                                                |  | 09.30.2008  |   |  | 12.31.2007  |  
|------------------------------------------------------------------------------- |  | ----------- | - |  | ----------- | -
|                                                                                |  | As restated |   |  |             |  
|                                                                                |  | See note 19 |   |  |             |  
|                                                                                |  | USD         |   |  | USD         |  
|                                                                                |  |             |   |  |             |  
|ASSETS                                                                          |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|Cash and cash equivalents                                                       |  | 1,342,063   |   |  | 8,480,771   |  
|Restricted cash                                                                 |  | 9,115,000   |   |  | -           |  
|Accounts receivable                                                             |  | 186,841     |   |  | 148,346     |  
|Prepaid expenses                                                                |  | 206,979     |   |  | 125,923     |  
|Total current assets                                                            |  | 10,850,883  |   |  | 8,755,040   |  
|                                                                                |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|Debt issuance costs                                                             |  | 298,050     |   |  | -           |  
|Tangible fixed assets                                                           |  | 246,524     |   |  | 153,074     |  
|Investment in associate                                                         |  | 238,304     |   |  | 238,304     |  
|Other non-current assets                                                        |  | 62,279      |   |  | 62,279      |  
|Total non-current
      assets                                                  |  | 845,157     |   |  | 453,657     |  
|                                                                                |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|TOTAL ASSETS                                                                    |  | 11,696,040  |   |  | 9,208,697   |  
|                                                                                |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                                            |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|Bank overdraft                                                                  |  | -           |   |  | 2,305       |  
|Accounts payable                                                                |  | 1,784,726   |   |  | 110,156     |  
|Bank loan                                                                       |  | 1,220,000   |   |  | -           |  
|Accrued expenses Albania
      fees                                             |  | -           |   |  | 400,000     |  
|Accrued expenses VAT                                                            |  | 365,301     |   |  | 264,984     |  
|Accrued expenses Professional fees                                              |  | 84,301      |   |  | 408,862     |  
|Accrued expenses Interest                                                       |  | 98,849      |   |  | -           |  
|Accrued expenses Commissions                                                    |  | 70,000      |   |  | -           |  
|Other accrued expenses                                                          |  | 210,775     |   |  | 168,192     |  
|Total current liabilities                                                       |  | 3,833,952   |   |  | 1,354,499   |  
|                                                                                |  |             |   |  |             |  
|Loan owed to a shareholder                                                      |  | -           |   |  | 39,329      |  
|Participation liabilities                                                       |  | 640,000     |   |  | -           |  
|Contingently convertible loan                                                   |  | 1,698,849   |   |  | -           |  
|Debentures                                                                      |  | 3,355,159   |   |  | -           |  
|Total non-current
      liabilities                                             |  | 5,694,008   |   |  | 39,329      |  
|                                                                                |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|TOTAL LIABILITIES                                                               |  | 9,527,960   |   |  | 1,393,828   |  
|                                                                                |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|Common stock (300,000,000 shares authorized, USD 0.001 par
      value,         |  |             |   |  |             |  
|117,570'122 and 112,156,488 shares, respectively, issued
      and outstanding) |  | 117,570     |   |  | 112,156     |  
|Additional paid-in capital                                                      |  | 42,175,280  |   |  | 21,550,636  |  
|Deficit accumulated during the development
      stage                          |  | (40,187,370 | ) |  | (13,904,456 | )
|Accumulated other
      comprehensive income                                    |  | 62,600      |   |  | 56,533      |  
|Total shareholders' equity                                                      |  | 2,168,080   |   |  | 7,814,870   |  
|                                                                                |  |             |   |  |             |  
|                                                                                |  |             |   |  |             |  
|TOTAL LIABILITIES
      AND SHAREHOLDERS' EQUITY                                |  | 11,696,040  |   |  | 9,208,697   |  

3

---

|MANAS PETROLEUM CORPORATION                    
|-----------------------------------------------
|(A DEVELOPMENT STAGE COMPANY)                  
|CONDENSED CONSOLIDATED FINANCIAL STATEMENTS    
|UNAUDITED                                      
|                                               
|                                               
|CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                            |  | For the three months ended |   |  | For the nine months ended |   |  | Period from |  
|----------------------------------------------------------- |  | -------------------------- | - |  | ------------------------- | - |  | ----------- | -
|                                                            |  |                            |   |  |                           |   |  |             |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|                                                            |  | 09.30.2008                 |   |  | 09.30.2007                |   |  | 09.30.2008  |  
|                                                            |  | As restated                |   |  |                           |   |  | As restated |  
|                                                            |  | See note 19                |   |  |                           |   |  | See note 19 |  
|                                                            |  | USD                        |   |  | USD                       |   |  | USD         |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|OPERATING REVENUES                                          |  |                            |   |  |                           |   |  |             |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|Other revenues                                              |  | 42,122                     |   |  | -                         |   |  | 635,318     |  
|Total revenues                                              |  | 42,122                     |   |  | -                         |   |  | 635,318     |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|OPERATING EXPENSES                                          |  |                            |   |  |                           |   |  |             |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|Personnel costs                                             |  | (2,347,406                 | ) |  | (2,012,860                | ) |  | (7,404,306  | )
|Exploration costs                                           |  | (2,788,817                 | ) |  | (105,651                  | ) |  | (4,076,829  | )
|Depreciation                                                |  | (14,872                    | ) |  | (4,210                    | ) |  | (36,709     | )
|Consulting fees                                             |  | (420,769                   | ) |  | (492,434                  | ) |  | (3,617,992  | )
|Administrative costs                                        |  | (695,284                   | ) |  | (714,948                  | ) |  | (2,137,094  | )
|Total operating
      expenses                              |  | (6,267,148                 | ) |  | (3,330,103                | ) |  | (17,272,929 | )
|                                                            |  |                            |   |  |                           |   |  |             |  
|Gain from sale of investment                                |  | -                          |   |  | -                         |   |  | -           |  
|Loss from sale of investment                                |  | -                          |   |  | -                         |   |  | -           |  
|OPERATING LOSS                                              |  | (6,225,026                 | ) |  | (3,330,103                | ) |  | (16,637,611 | )
|                                                            |  |                            |   |  |                           |   |  |             |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|NON-OPERATING INCOME / (EXPENSE)                            |  |                            |   |  |                           |   |  |             |  
|Exchange differences                                        |  | 816                        |   |  | 8,825                     |   |  | 60,373      |  
|Warrants issuance expense                                   |  | (9,439,775                 | ) |  | -                         |   |  | (9,439,775  | )
|Interest income                                             |  | 49,702                     |   |  | 97,622                    |   |  | 124,053     |  
|Interest expense                                            |  | (270,333                   | ) |  | (3,950                    | ) |  | (388,427    | )
|Loss before taxes
      and equity in net loss of associate |  | (15,884,616                | ) |  | (3,227,606                | ) |  | (26,281,387 | )
|                                                            |  |                            |   |  |                           |   |  |             |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|Taxes                                                       |  | (750                       | ) |  | (352                      | ) |  | (1,527      | )
|Equity in net loss of associate                             |  | -                          |   |  | (18,169                   | ) |  | -           |  
|Minority interest in net income                             |  | -                          |   |  | -                         |   |  | -           |  
|Net loss                                                    |  | (15,885,366                | ) |  | (3,246,127                | ) |  | (26,282,914 | )
|                                                            |  |                            |   |  |                           |   |  |             |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|Weighted average number
      of outstanding shares         |  | 114,700,557                |   |  | 111,878,422               |   |  | 113,610,124 |  
|                                                            |  |                            |   |  |                           |   |  |             |  
|Basic and diluted
      loss per share                      |  | (0.14                      | ) |  | (0.03                     | ) |  | (0.23       | )

4

---

|MANAS PETROLEUM CORPORATION                
|-------------------------------------------
|(A DEVELOPMENT STAGE COMPANY)              
|CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|UNAUDITED                                  
|                                           
|                                           
|CONDENSED CONSOLIDATED CASH FLOW STATEMENT 

|                                                                          |  | For the nine months ended |   |  | Period from |  
|------------------------------------------------------------------------- |  | ------------------------- | - |  | ----------- | -
|                                                                          |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|                                                                          |  | 09.30.2008                |   |  | 09.30.2007  |  
|                                                                          |  | As restated               |   |  |             |  
|                                                                          |  | See note 19               |   |  |             |  
|                                                                          |  | USD                       |   |  | USD         |  
|                                                                          |  |                           |   |  |             |  
|OPERATING ACTIVITIES                                                      |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|Net loss for the period                                                   |  | (26,282,894               | ) |  | (8,755,543  | )
|                                                                          |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|To reconcile net loss to net cash used                                    |  |                           |   |  |             |  
|in operating activities                                                   |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|Minority interest in net income                                           |  | -                         |   |  | -           |  
|Gain from sale of investment                                              |  | -                         |   |  | -           |  
|Loss from sale of investment                                              |  | -                         |   |  | 900         |  
|Equity in net loss of associate                                           |  | -                         |   |  | 38,302      |  
|Depreciation                                                              |  | 36,709                    |   |  | 8,018       |  
|Amortization of debt issuance costs                                       |  | 51,860                    |   |  | -           |  
|Warrant issuance expense                                                  |  | 9,439,775                 |   |  | -           |  
|Exchange differences                                                      |  | (60,373                   | ) |  | 18,195      |  
|Interest expense on contingently convertible
      loan                   |  | 18,849                    |   |  | -           |  
|Interest expense on debentures                                            |  | 153,149                   |   |  | -           |  
|Increase in participation liabilities                                     |  | 640,000                   |   |  | -           |  
|Decrease / (increase) in receivables                                      |  | (64,615                   | ) |  | (166,775    | )
|Decrease / (increase) in other non-current
      assets                   |  | -                         |   |  | -           |  
|(Decrease) / increase in accounts payables                                |  | 1,673,141                 |   |  | (411,385    | )
|(Decrease) / increase in accrued expenses                                 |  | (537,748                  | ) |  | 30,848      |  
|Stock-based compensation                                                  |  | 8,112,293                 |   |  | 5,578,623   |  
|Cash flow from operating activities                                       |  | (6,819,854                | ) |  | (3,658,817  | )
|                                                                          |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|INVESTING ACTIVITIES                                                      |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|Purchase of tangible fixed assets and computer software                   |  | (130,160                  | ) |  | (74,043     | )
|Sale of tangible fixed assets and computer
      software                 |  | -                         |   |  | -           |  
|Proceeds from sale of investment                                          |  | -                         |   |  | -           |  
|Restricted cash                                                           |  | (9,115,000                | ) |  | -           |  
|Acquisition of investment
      in associate                              |  | -                         |   |  | -           |  
|Cash flow from investing activities                                       |  | (9,245,160                | ) |  | (74,043     | )
|                                                                          |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|FINANCING ACTIVITIES                                                      |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|Contribution share capital founders                                       |  | -                         |   |  | -           |  
|Issuance of units                                                         |  | 1,849,429                 |   |  | 13,208,055  |  
|Issuance of contingently convertible loan                                 |  | 1,680,000                 |   |  | -           |  
|Issuance of debentures                                                    |  | 3,760,000                 |   |  | -           |  
|Issuance of warrants                                                      |  | 670,571                   |   |  | -           |  
|Cash arising on recapitalization                                          |  | -                         |   |  | 6,510       |  
|Shareholder loan repaid                                                   |  | (39,329                   | ) |  | (372,162    | )
|Shareholder loan raised                                                   |  | -                         |   |  | -           |  
|Increase in bank loan                                                     |  | 1,220,000                 |   |  | -           |  
|Payment of debt issuance costs                                            |  | (279,910                  | ) |  | -           |  
|(Decrease) / increase
      in bank overdraft                             |  | (2,305                    | ) |  | 20,325      |  
|Cash flows from financing activities                                      |  | 8,858,456                 |   |  | 12,862,728  |  
|                                                                          |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|Net change in cash and cash equivalents                                   |  | (7,206,558                | ) |  | 9,129,868   |  
|                                                                          |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|Cash and cash equivalents at the beginning of the period                  |  | 8,480,771                 |   |  | 1,090,098   |  
|Currency translation effect on cash and cash equivalents                  |  | 67,870                    |   |  | (18,083     | )
|Cash and cash equivalents
      at the end of the period                  |  | 1,342,063                 |   |  | 10,201,883  |  
|                                                                          |  |                           |   |  |             |  
|                                                                          |  |                           |   |  |             |  
|Supplement schedule of non-cash investing
      and financing activities: |  |                           |   |  |             |  
|Forgiveness of debt by major shareholder                                  |  | -                         |   |  | -           |  
|Deferred consideration for interest in CJSC South Petroleum
      Co.     |  | -                         |   |  | -           |  
|Warrants issued to pay placement commission expenses                      |  | -                         |   |  | 2,689,910   |  
|Debenture interest paid in common shares                                  |  | 57,449                    |   |  | -           |  

5

---

|MANAS PETROLEUM CORPORATION                                                
|---------------------------------------------------------------------------
|(A DEVELOPMENT STAGE COMPANY)                                              
|CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                
|UNAUDITED                                                                  
|                                                                           
|CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS'
      EQUITY / (DEFICIT)

|                                            |  |             |  |  |                     |  |  |                  |   |  | Deficit     |   |  |                 |   |  |                       |   |  |                |  
|------------------------------------------- |  | ----------- |  |  | ------------------- |  |  | ---------------- | - |  | ----------- | - |  | --------------- | - |  | --------------------- | - |  | -------------- | -
|                                            |  |             |  |  |                     |  |  |                  |   |  | accumulated |   |  | **Accumulated** |   |  |                       |   |  |                |  
|                                            |  |             |  |  |                     |  |  |                  |   |  | during the  |   |  | Other Compre-   |   |  | Total share-          |   |  | Compre-        |  
|                                            |  | Number of   |  |  |                     |  |  | Additional paid- |   |  | development |   |  | hensive Income  |   |  | **holders' equity /** |   |  | hensive Income |  
|SHAREHOLDERS' EQUITY
      / (DEFICIT)      |  | Shares      |  |  | Share
      Capital |  |  | **in capital**   |   |  | stage       |   |  | (Loss)          |   |  | (deficit)             |   |  | (Loss)         |  
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|Balance May 25, 2004                        |  | -           |  |  | -                   |  |  | -                |   |  | -           |   |  | -               |   |  | -                     |   |  | -              |  
|Contribution share capital from founders    |  | 80,000,000  |  |  | 80,000              |  |  | 19               |   |  | -           |   |  | -               |   |  | 80,019                |   |  | -              |  
|Currency translation adjustment             |  | -           |  |  | -                   |  |  | -                |   |  | -           |   |  | (77,082         | ) |  | (77,082               | ) |  | (77,082        | )
|Net loss for the period                     |  | -           |  |  | -                   |  |  | -                |   |  | (601,032    | ) |  | -               |   |  | (601,032              | ) |  | (601,032       | )
|Balance December 31, 2004                   |  | 80,000,000  |  |  | 80,000              |  |  | 19               |   |  | (601,032    | ) |  | (77,082         | ) |  | (598,095              | ) |  | (678,114       | )
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|Balance January 1, 2005                     |  | 80,000,000  |  |  | 80,000              |  |  | 19               |   |  | (601,032    | ) |  | (77,082         | ) |  | (598,095              | ) |  |                |  
|Currency translation adjustment             |  | -           |  |  | -                   |  |  | -                |   |  |             |   |  | 218,699         |   |  | 218,699               |   |  | 218,699        |  
|Net loss for the year                       |  | -           |  |  | -                   |  |  | -                |   |  | (1,993,932  | ) |  | -               |   |  | (1,993,932            | ) |  | (1,993,932     | )
|Balance December 31, 2005                   |  | 80,000,000  |  |  | 80,000              |  |  | 19               |   |  | (2,594,964  | ) |  | 141,617         |   |  | (2,373,328            | ) |  | (1,775,233     | )
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|Balance January 1, 2006                     |  | 80,000,000  |  |  | 80,000              |  |  | 19               |   |  | (2,594,964  | ) |  | 141,617         |   |  | (2,373,328            | ) |  |                |  
|Forgiveness of debt by major shareholder    |  | -           |  |  | -                   |  |  | 1,466,052        |   |  | -           |   |  | -               |   |  | 1,466,052             |   |  | -              |  
|Currency translation adjustment             |  | -           |  |  | -                   |  |  | -                |   |  | -           |   |  | (88,153         | ) |  | (88,153               | ) |  | (88,153        | )
|Net income for the year                     |  | -           |  |  | -                   |  |  | -                |   |  | 1,516,004   |   |  | -               |   |  | 1,516,004             |   |  | 1,516,004      |  
|Balance December
      31, 2006             |  | 80,000,000  |  |  | 80,000              |  |  | 1,466,071        |   |  | (1,078,960  | ) |  | 53,464          |   |  | 520,575               |   |  | 1,427,851      |  
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|Balance January 1, 2007                     |  | 80,000,000  |  |  | 80,000              |  |  | 1,466,071        |   |  | (1,078,960  | ) |  | 53,464          |   |  | 520,575               |   |  |                |  
|Recapitalization transaction (Note 1)       |  | 20,110,400  |  |  | 20,110              |  |  | (356,732         | ) |  | -           |   |  | -               |   |  | (336,622              | ) |  | -              |  
|Stock-based compensation                    |  | 880,000     |  |  | 880                 |  |  | 7,244,409        |   |  | -           |   |  | -               |   |  | 7,245,289             |   |  | -              |  
|Private placement of Units, issued for cash |  | 10,330,152  |  |  | 10,330              |  |  | 9,675,667        |   |  | -           |   |  | -               |   |  | 9,685,997             |   |  | -              |  
|Private placement of Units                  |  | 10,709      |  |  | 11                  |  |  | (11              | ) |  | -           |   |  | -               |   |  | -                     |   |  | -              |  
|Private placement of Units, issued for cash |  | 825,227     |  |  | 825                 |  |  | 3,521,232        |   |  | -           |   |  | -               |   |  | 3,522,057             |   |  | -              |  
|Currency translation adjustment             |  | -           |  |  | -                   |  |  | -                |   |  | -           |   |  | 3,069           |   |  | 3,069                 |   |  | 3,069          |  
|Net loss for the year                       |  | -           |  |  | -                   |  |  | -                |   |  | (12,825,496 | ) |  | -               |   |  | (12,825,496           | ) |  | (12,825,496    | )
|Balance December 31, 2007                   |  | 112,156,488 |  |  | 112,156             |  |  | 21,550,636       |   |  | (13,904,456 | ) |  | 56,533          |   |  | 7,814,870             |   |  | (12,822,427    | )
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|Balance January 1, 2008                     |  | 112,156,488 |  |  | 112,156             |  |  | 21,550,636       |   |  | (13,904,456 | ) |  | 56,533          |   |  | 7,814,870             |   |  |                |  
|Stock-based compensation                    |  | 1,369,893   |  |  | 1,370               |  |  | 4,536,211        |   |  | -           |   |  | -               |   |  | 4,537,580             |   |  | -              |  
|Currency translation adjustment             |  | -           |  |  | -                   |  |  | -                |   |  | -           |   |  | 1,621           |   |  | 1,621                 |   |  | 1,621          |  
|Net loss for the period                     |  | -           |  |  | -                   |  |  | -                |   |  | (6,163,605  | ) |  | -               |   |  | (6,163,605            | ) |  | (6,163,605     | )
|Balance March 31,
      2008                |  | 113,526,381 |  |  | 113,526             |  |  | 26,086,847       |   |  | (20,068,061 | ) |  | 58,154          |   |  | 6,190,466             |   |  | (6,161,984     | )
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|Balance April 1, 2008                       |  | 113,526,381 |  |  | 113,526             |  |  | 26,086,847       |   |  | (20,068,061 | ) |  | 58,154          |   |  | 6,190,466             |   |  | (6,161,984     | )
|Stock-based compensation                    |  | 43,741      |  |  | 44                  |  |  | 1,814,052        |   |  | -           |   |  | -               |   |  | 1,814,096             |   |  | -              |  
|Issuance of warrants                        |  | -           |  |  | -                   |  |  | 240,000          |   |  | -           |   |  | -               |   |  | 240,000               |   |  | -              |  
|Beneficial Conversion Feature               |  | -           |  |  | -                   |  |  | 557,989          |   |  | -           |   |  | -               |   |  | 557,989               |   |  | -              |  
|Currency translation adjustment             |  | -           |  |  | -                   |  |  | -                |   |  | -           |   |  | (1,750          | ) |  | (1,750                | ) |  | (1,750         | )
|Net loss for the period                     |  | -           |  |  | -                   |  |  | -                |   |  | (4,233,943  | ) |  | -               |   |  | (4,233,943            | ) |  | (4,233,943     | )
|Balance June 30, 2008                       |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|As restated (see note 19)                   |  | 113,570,122 |  |  | 113,570             |  |  | 28,698,889       |   |  | (24,302,004 | ) |  | 56,404          |   |  | 4,566,858             |   |  | (10,397,677    | )
|                                            |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|Balance July 1, 2008                        |  | 113,570,122 |  |  | 113,570             |  |  | 28,698,889       |   |  | (24,302,004 | ) |  | 56,404          |   |  | 4,566,858             |   |  | (10,397,677    | )
|Stock-based compensation                    |  | -           |  |  | -                   |  |  | 1,760,617        |   |  | -           |   |  | -               |   |  | 1,760,617             |   |  | -              |  
|Private placement of Units, issued for cash |  | 4,000,000   |  |  | 4,000               |  |  | 1,845,429        |   |  | -           |   |  | -               |   |  | 1,849,429             |   |  | -              |  
|Issuance of warrants                        |  | -           |  |  | -                   |  |  | 9,870,346        |   |  | -           |   |  | -               |   |  | 9,870,346             |   |  | -              |  
|Currency translation adjustment             |  | -           |  |  | -                   |  |  | -                |   |  | -           |   |  | 6,196           |   |  | 6,196                 |   |  | 6,196          |  
|Net loss for the period                     |  | -           |  |  | -                   |  |  | -                |   |  | (15,885,366 | ) |  | -               |   |  | (15,885,366           | ) |  | (15,885,366    | )
|Balance September 30, 2008                  |  |             |  |  |                     |  |  |                  |   |  |             |   |  |                 |   |  |                       |   |  |                |  
|As restated (see
      note 19)             |  | 117,570,122 |  |  | 117,570             |  |  | 42,175,281       |   |  | (40,187,370 | ) |  | 62,600          |   |  | 2,168,080             |   |  | (26,276,847    | )

6

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MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

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 and nine months ended September 30, 2008
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-KSB for the year ended December 31, 2007.

The Company considers itself as a development stage company
since it has not realized any revenues from its planned principal operations. As
a development stage enterprise, the Company discloses the deficit accumulated
during the development 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. The Group has a focused
strategy on exploration and developing oil and gas resources in Central Asia
(Kyrgyz Republic and subsidiary in Republic of Tajikistan), in the Balkan Region
(subsidiary in Albania) as well as in Latin America (subsidiary in Chile).

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.

2. GOING CONCERN

The condensed consolidated financial statements have been
prepared on the assumption that the Group will continue as a going concern. The
Group has no operating income and therefore will remain dependent upon continued
funding from its shareholders or other sources. Our

7

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MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

cash balance as of September 30, 2008 was $10,457,063, of which
  $9,115,000 has been restricted for a bank guarantee for the first phase of our
  work program in Albania (covering the seismic and geological and geographical
  (G&G) costs in Albania) and two escrow accounts for the first
  phase of our work program in Mongolia (covering the seismic and G&G costs
  in Mongolia), leaving a balance of $1,342,063. The Groups net losses since
  inception were $40,191,702 .
  Based on our expected monthly burn rate per month, we estimate that we have
  sufficient working capital to fund operations for two months. Given the turbulences
  on the global equity markets, we now anticipate that the planned financing of
  up to $80,000,000 will take place from now until 2009.

In order to continue to fund operations for the next twelve
months and implement the geological work program for our projects particularly
in Central Asia and the Balkan Region as well as 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.

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 September 30, 2008 and
December 31, 2007 and for the three and nine months ended September 30, 2008 and
2007 and for the period from inception, May 25, 2004, to September 30, 2008 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-KSB for the year ended December 31,
2007.

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 September 30, 2008 and December 31,
2007, results of operations for the three and nine months ended June 30, 2008
and 2007 and for the period from inception, May 25, 2004, to September 30, 2008
and cash flows for the nine months ended September 30, 2008 and 2007 and for the
period from inception, May 25, 2004, to September 30, 2008, as applicable, have
been made. The results of operations for the three and nine months ended
September 30, 2008 are not necessarily indicative of the operating results for
the full fiscal year or any future periods.

4. NEW ACCOUNTING STANDARDS: NOT YET ADOPTED

8

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MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

FASB Statement No. 160,Non-controlling Interests in Consolidated
  Financial Statements.On December 4, 2007 the FASB issued SFAS No. 160,
  Non-controlling Interests in Consolidated Financial Statements - An Amendment
  of ARB No. 51. SFAS 160 establishes new accounting and reporting standards for
  the non-controlling interest in a subsidiary and for the deconsolidation of
  a subsidiary. Specifically, this statement requires the recognition of a non-controlling
  interest (minority interest) as equity in the consolidated financial statements
  and separate from the parent's equity. The amount of net income attributable
  to the non-controlling interest will be included in consolidated net income
  on the face of the income statement. SFAS 160 clarifies that changes in a parent's
  ownership interest in a subsidiary that do not result in deconsolidation are
  equity transactions if the parent retains its controlling financial interest.
  In addition, this statement requires that a parent recognize a gain or loss
  in net income when a subsidiary is deconsolidated. Such gain or loss will be
  measured using the fair value of the non-controlling equity investment on the
  deconsolidation date. SFAS 160 also includes expanded disclosure requirements
  regarding the interests of the parent and its non-controlling interest. SFAS
  160 is effective for fiscal years, and interim periods within those fiscal years,
  beginning on or after December 15, 2008. Earlier adoption is prohibited. The
  impact, if any, to the Group from the adoption of SFAS 160 in 2009 will depend
  on the development of our business at that time.

5. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

|                          |  |               |  |  |               |  |  |          |  |  |             |  |  | USD       |  |  |           |  |  |           | 
|------------------------- |  | ------------- |  |  | ------------- |  |  | -------- |  |  | ----------- |  |  | --------- |  |  | --------- |  |  | --------- | 
|                          |  |               |  |  |               |  |  |          |  |  | USD (held   |  |  | TOTAL     |  |  | USD       |  |  | USD       | 
|                          |  | USD(held      |  |  | USD(held      |  |  | USD(held |  |  | in other    |  |  | Sept 30,  |  |  | TOTAL     |  |  | TOTAL     | 
|                          |  | in
      USD) |  |  | in
      EUR) |  |  | inCHF)   |  |  | currencies) |  |  | 2008      |  |  | 2007      |  |  | 2006      | 
|Bank and postal accounts  |  | 1,317,260     |  |  | 1,006         |  |  | 14,406   |  |  | 9,391       |  |  | 1,342,063 |  |  | 8,480,771 |  |  | 1,090,098 | 
|Cash and Cash Equivalents |  | 1,317,260     |  |  | 1,006         |  |  | 14,406   |  |  | 9,391       |  |  | 1,342,063 |  |  | 8,480,771 |  |  | 1,090,098 | 

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.

The Group has a bank guarantee for our Albanian project of
$5,115,000 as well as two escrow accounts for our Mongolian project of
$4,000,000 which is considered restricted cash totaling $9,115,000 as of
September 30, 2008.

During the three months ending September 30, 2008, the funds in
the restricted cash position were reduced by $1,065,000 upon the investments in
G&G and seismic work carried out in Albania. The funds in the bank guarantee
will be continuously reduced on a monthly basis in accordance with negotiations
with the Albanian government and are available at the Groups own disposal
thereafter (there is no restriction or limitation of these funds after their
release).

During the three months ending September 30, 2008, the funds in
the restricted cash position were increased by $4,000,000 for the Groups two
escrow accounts in Mongolia, which cover the G&G and seismic work expected
to be carried out in Mongolia for Phase 1. The funds in the escrow accounts will
remain until Phase 1 of the work program are completed in

9

---

MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

accordance with the Mineral Resources and Petroleum Authority
of Mongolia and are available at the Groups own disposal thereafter (there is
no restriction or limitation of these funds after their release). If Manas does
not complete Phase 1 these funds will be forfeit.

6. TANGIBLE FIXED ASSETS

|2008                                     |  | Office Equipment |   |  | Vehicles |   |  | Leasehold    |   |  | Total   |  
|---------------------------------------- |  | ---------------- | - |  | -------- | - |  | ------------ | - |  | ------- | -
|                                         |  | &Furniture       |   |  |          |   |  | Improvements |   |  |         |  
|                                         |  | USD              |   |  | USD      |   |  | USD          |   |  | USD     |  
|Cost at January 1                        |  | 77,845           |   |  | 53,000   |   |  | 42,424       |   |  | 173,269 |  
|Additions                                |  | 50,830           |   |  | 74,379   |   |  | 4,952        |   |  | 130,160 |  
|Disposals                                |  | -                |   |  | -        |   |  | -            |   |  | -       |  
|Cost at September
      30               |  | 128,674          |   |  | 127,379  |   |  | 47,375       |   |  | 303,429 |  
|                                         |  |                  |   |  |          |   |  |              |   |  |         |  
|Accumulated depreciation at January 1    |  | (10,471          | ) |  | (9,000   | ) |  | (724         | ) |  | (20,195 | )
|Depreciation                             |  | (18,346          | ) |  | (11,339  | ) |  | (7,025       | ) |  | (36,709 | )
|Disposals                                |  | -                |   |  | -        |   |  | -            |   |  | -       |  
|Accumulated depreciation at September 30 |  | (28,817          | ) |  | (20,339  | ) |  | (7,748       | ) |  | (56,904 | )
|                                         |  |                  |   |  |          |   |  |              |   |  |         |  
|Net book value at September 30           |  | 99,858           |   |  | 107,040  |   |  | 39,627       |   |  | 246,524 |  

Depreciation expense and accumulated depreciation for the year
ended December 31, 2007 were $15,633 and $20,195.

7. STOCK COMPENSATION PROGRAM

On February 1, 2008, the Company granted 1,000,000 stock
options to officers at a price of $2.10 per share. The strike price represents
the closing share price on the grant date. These stock options vest over 36
months with 1/12 vested per quarter. Compensation cost, being the fair value of
the options at the grant date, is calculated to be $1,127,410 of which $93,951
will be expensed every quarter as the remainder vest.

The fair value of all of the options was determined using the
Black-Scholes option pricing model using a 6-year expected life of the option, a
volatility factor of 50%, a risk-free rate of 5.0% and no assumed dividend rate.

On March 3, 2008, the Company granted 150,000 shares to
employees in Albania and 1,219,893 shares to consultants as payment for services
(market price at grant date $2.05 per share). Compensation costs are calculated
to be $2,808,281. Of this charge, $307,500 and $2,500,781 were recorded in
personnel costs and consulting fees respectively.

For the nine months ending September 30, 2008, Manas recorded a
total charge of $8,058,814 in respect of the equity awards granted under the
stock compensation and stock option plans ($1,760,617 for the third quarter of
2008). Of this total charge, $5,175,379 and $2,883,435 were recorded in
personnel costs and consulting fees, respectively, for the nine months ending
September 30, 2008 (or $1,633,065 and $127,551, respectively, for the third
quarter of 2008).

8. DEBENTURE

10

---

MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

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 at the option of the holder and will expire on April
  30, 2010. The net proceeds after paying finders fee were $3,790,000. The Debentures
  bear an interest of 8% p.a.
  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 and 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.

For the nine
  months ending September 30, 2008, we have accreted the Debentures for the discount,
  including the beneficial conversion feature, that relates to the current period
  ($153,148).

9. WARRANTS

As of September 30, 2008, the Company had a total of 17,933,989
warrants outstanding to purchase common stock. Each warrant entitles the holder
to purchase one share of the Companys common stock. The Company has reserved
17,933,989 shares of common stock in the event that these warrants are
exercised.

During the three month period ending September 30, 2008, the
  Company has issued 4,000,000 warrants exercisable at $0.95 each pursuant to
  the issuance of a private placement unit offering amounting to a fair value
  of $430,571 or $0.108 per warrant. These warrants expire on September 4, 2010.
  The fair value of the warrants was determined using the Black-Scholes option
  pricing model using a 2-year term of the option, a volatility factor of 50%,
  a risk-free rate of 5.0% and no assumed dividend rate.

11

---

MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

Subsequent
  to the issuance of the Companys financial statements for the quarter ended
  September 30, 2008, the Companys management determined that they should
  have incurred a current period expense for the subsequent equity sales adjustment
  clause included in most of the Companys warrant agreements. The private
  placement on September 4, 2008 resulted in the strike price of 13,933,989 warrant
  agreements being reduced to the last equity issuance price ($0.59) and the number
  of common shares to be issued upon exercise of the warrant agreements being
  increased to 69,966,703. The resulting repricing is considered to be a cancellation
  of the original warrant agreements and the issuance of new warrant agreements.
  The accounting impact is to record an expense for the difference in the fair
  value of the new warrant agreements and the fair value of the original warrant
  agreements immediately prior to the adjustment. The result is a current period
  charge of $9,439,775 and also a corresponding increase to additional paid in
  capital.

10. BANK LOAN

On September 21, 2008, the Company entered into a loan
agreement (Debt) and raised a principal amount equaling $2,440,000. Proceeds
of $1,220,000 have been received in the current quarter. The Debt carries a per
annum interest of 12% payable at the date of maturity and is payable in full on
September 21, 2009. No issuance costs apply.

11. 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 finders 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 will be
reduced as expenses are incurred. The liability will be re-evaluated in future
periods and any change will be recorded immediately in the statement of
operations.

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 conversion
feature represents an embedded derivative that is not indexed to the Companys
own shares because it is convertible at a variable price. Accordingly, it must
be recorded as a liability at fair value with changes in fair value recorded in
the statement of operations. At inception and September 30, 2008 the Company has
estimated the fair value of the conversion option at zero.

12

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MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

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.

12. PRIVATE PLACEMENT

On September 4, 2008, the Company conducted a private placement
in which it sold 4,000,000 units for $2,600,000, or $0.65 per unit. Each unit
consisted of one share of common stock, one warrant and an interest in rights
granted to us by the Mineral Resources and Petroleum Authority of Mongolia with
respect to certain production sharing contracts governing areas in Mongolia
referred to as Blocks 13 and 14. The Company agreed to cover the unit holders
share of the exploration costs on Blocks 13 and 14 through exploration phases 1,
2 and 3 herein after referred to as the Participation Liability.

Each of the 4,000,000 warrants granted under the Securities
Purchase Agreement is exercisable for two years at $0.95 per warrant. The
warrants carry tag-along registration rights such that if a registration
statement (other than on Form S-4 or S-8) is filed, the holders may demand that
the shares underlying their warrants be included in such registration statement.
If no such registration statement is filed by January 4, 2009, the Company has
to undertake its best efforts to file a registration statement for the shares
underlying the warrants by May 4, 2009. There is no financial penalty in the
agreement should the Company fail to file a registration statement.

Of the aggregate proceeds received of $2,600,000, $430,571 has
been allocated to the warrants based on their estimated fair value, $320,000 has
been allocated to the Participation Liability and the balance has been allocated
to the Shareholders Equity.

The amount allocated to the Participation Liability was
determined in the same manner as the Participation Liability arising in
connection with the Loans described in Note 13.

13. PARTICIPATION LIABILITY

On August 18, 2008, the Company completed the issuance of
contingently convertible loans (the Loans) and in addition to the interest
payable under the Loans, the Loan holders will obtain an interest in 8% of our
interest in our operations in Mongolia related to the Blocks 13 and 14 without
having to undertake any of the obligations of work programs connected to those
lots (governing areas in Mongolia referred to as Tsagaan-Els 13 and Zuuabayan
14).

On September 4, 2008, we conducted a private placement and each
unit consisted of one share of common stock, one warrant and an interest in
rights granted to us by the Mineral Resources and Petroleum Authority of
Mongolia with respect to certain production sharing contracts governing areas in
Mongolia referred to as Tsagaan-Els 13 and Zuuabayan 14. A total of 8% of our
interest in our operations in Mongolia related to the Blocks 13 and 14 without
having to undertake any of the obligations of work programs connected to those
lots (governing areas in Mongolia referred to as Tsagaan-Els 13 and Zuuabayan
14).

13

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MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

The Company considers each of the 8% participation in the
interest of our operations in Mongolia as a Participation Liability of $320,000
each (totalling $640,000) and will amortize using the effective interest rate
method over a period of two years.

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

|(1) | Including Branch in Albania                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------
|(2) | Founded in 2007                                                                                                    
|(3) | CJSC South Petroleum Company was founded by DWM Petroleum
      AG; equity method investee that is not consolidated
|(4) | CJSC Somon Oil Company was founded by DWM Petroleum
    AG                                                         
|(5) | Founded in 2008                                                                                                    
|(6) | Founded in 2008                                                                                                    
|(7) | Manas Chile Energia Limitada was founded by Manas
      Management Services Ltd.; founded in 2008                  

The ultimate control owner of the Group is the management of
the Group (58%). 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:

Board of directors
      
      01.01.-09.30.08
      
      
      01.01.-09.30.07USD
      
      
      USDPayments to directors for office rent
      
      141,510
      
      
      72,273Payments to related companies controlled bydirectors for rendered consulting services
      
      5,814
      
      
      -09.30.08
      
      
      09.30.07USD
      
      
      USDLoan from a director
      
      -
      
      
      37,758


The loans granted from related parties are perpetual loans with
indefinite maturity and bear interest based on market conditions. Consulting
services by related parties are performed for a fee. This consulting agreement
with the company controlled by the director was cancelled on August 31,
2007.

15. COMMITMENTS & CONTINGENT LIABILITIES

Legal actions and claims (Kyrgyz Republic, Republic of Tajikistan,
  Chile and Albania)In the ordinary course of business, the associate/subsidiaries or branches
  in the Kyrgyz Republic, Republic of Tajikistan, Chile and Albania may be subject
  to legal actions and complaints. Management believes that the ultimate liability,
  if any, arising from such actions

14

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MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

or complaints will not have a material adverse effect on the
financial condition or the results of future operations of the
associate/subsidiaries in the Kyrgyz Republic, Republic of Tajikistan, Chile and
Albania.

During the initial phase of making application for our Chilean
Exploration license, a joint bidding group was formed with Manas, IPR and Energy
Focus. Each had a one-third interest.

Manas and IPR are established petroleum businesses. Energy Focus
  is a start-up business. On
  its 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 its
  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. IPR and Manas disagree with this interpretation.

No litigation has been commenced as of September 30, 2008.
Manas and IPR are firmly of the view that Energy Focus no longer has any right
to join the consortium. While Energy Focus has not accepted this position, they
have not commenced litigation.

At September 30, 2008, there had been no legal actions against
the associate/subsidiaries or branches in the Kyrgyz Republic, Republic of
Tajikistan, Chile and Albania.

Management believes that the Group, including
associate/subsidiaries or branches in the Kyrgyz Republic, Republic of
Tajikistan, Chile and Albania 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.

16. PERSONNEL COSTS AND EMPLOYEE BENEFIT PLANS

|                              | For the nine months ended | For the nine months ended
|----------------------------- | ------------------------- | -------------------------
|                              | September
      30, 2008  | September
      30, 2007 
|                              | USD                       | USD                      
|Wages and salaries            | 7,193,389                 | 3,632,948                
|Social security contributions | 106,026                   | 72,311                   
|Pension fund contribution     | 104,423                   | 2,128                    
|Other personnel expenses      | 468                       | 1,691                    
|Total Personnel Costs         | 7,404,306                 | 3,709,079                

|                              | For the three months ended | For the three months ended
|----------------------------- | -------------------------- | --------------------------
|                              | September
      30, 2008   | September
      30, 2007  
|                              | USD                        | USD                       
|Wages and salaries            | 2,349,351                  | 1,987,431                 
|Social security contributions | 29,717                     | 25,577                    
|Pension fund contribution     | -31,662                    | -149                      
|Other personnel expenses      | -                          | -                         
|Total Personnel Costs         | 2,347,406                  | 2,012,860                 

15

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MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

17. EARNINGS PER SHARE

Loss per share is calculated as Net Loss for the nine months
ended September 30, 2008 and September 30, 2007 divided by 113,610,124 and
107,416,090 outstanding shares and as Net Loss for the three months ended on
September 30, 2008 and September 30, 2007 divided by 114,700,557 and 111,878,422
outstanding shares.

For the three and nine months ended September 30, 2008 and
September 30, 2007 all share options and warrants were excluded from the
calculation of the diluted weighted average number of shares, because the Group
made a net loss during the calculation period and the effect of their inclusion
would be anti-dilutive.

18. SUBSEQUENT EVENT(S)

On October 14, 2008, the Albanian National Agency of Natural
Resources (AKBN) informed the Company that the bank guarantee associated with
the Albanian project can be further reduced by $958,256. The funds are available
at Groups own disposal (no restriction or limitation of these funds after
release).

On November 7, 2008, the Albanian National Agency of Natural
Resources (AKBN) informed the Company that the bank guarantee associated with
the Albanian project can be further reduced by $356,319. The funds are available
at Groups own disposal (no restriction or limitation of these funds after
release).

19. RESTATEMENT

Subsequent
  to the issuance of the Companys financial statements for the quarter ended
  September 30, 2008, the Companys management determined that the beneficial
  conversion feature related to the Debentures should not have been expensed at
  inception, but instead amortized over the term of the Debentures. If the beneficial
  conversion feature had been recorded properly, the loss for the three month
  period ended September 30, 2008 would have been increased for the amortization,
  while the loss for the nine month period ended September 30, 2008 and for the
  period from inception to September 30, 2008 would have been reduced. In addition,
  the carrying value of the Debentures would have been reduced by the amount of
  the unamortized beneficial conversion feature. The beneficial conversion feature
  will be accreted over the term of the Debentures and classified as part of interest
  expense. As a result, the financial statements have been restated from the amounts
  previously reported to reflect the proper recording of the beneficial conversion
  feature and its subsequent amortization.

Subsequent
  to the issuance of the Companys financial statements for the quarter ended
  September 30, 2008, the Companys management determined that they should
  have incurred a current period expense for the subsequent equity sales adjustment
  clause included in most of the Companys warrant agreements. The private
  placement on September 4, 2008 resulted in the strike price of 13,933,989 warrant
  agreements being reduced to the last equity issuance

16

---

MANAS PETROLEUM CORPORATION (A DEVELOPMENT STAGE COMPANY)
CONDENSESD CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the three and nine months ended September 30, 2008 and September 30,
2007 (Unaudited)

price ($0.59)
  and the number of common shares to be issued upon exercise of the warrant agreements
  being increased to 69,966,703. The resulting repricing is considered to be a
  cancellation of the original warrant agreements and the issuance of new warrant
  agreements. The accounting impact is to record an expense for the difference
  in the fair value of the new warrant agreements and the fair value of the original
  warrant agreements immediately prior to the adjustment. The result is a current
  period charge of $9,439,775 and also a corresponding increase to additional
  paid in capital.

As at September 30, 2008in USDAs
      previouslyreported
    
    
    As restatedDebentures
    
    3,810,000
    
    
    3,355,159Additional paid-in capital
    
    32,735,505
    
    
    42,175,280Deficit accumulated during the development
      stage
    
    (31,202,436
    )
    
    (40,187,370
    )


|                           |  | For the three months ended |   |  | For the nine months ended |   |  | For the period from inception
      to |  
|-------------------------- |  | -------------------------- | - |  | ------------------------- | - |  | -------------------------------------- | -
|                           |  | September 30, 2008         |   |  | September 30, 2008        |   |  | September 30, 2008                     |  
|                           |  | in USD                     |   |  | in USD                    |   |  | in USD                                 |  
|                           |  | As previously              |   |  |                           |   |  | As previously                          |  
|                           |  | reported                   |   |  | As
      restated         |   |  | reported                               |  
|                           |  |                            |   |  |                           |   |  |                                        |  
|Warrant issuance cost      |  | -                          |   |  | (9,349,775                | ) |  | -                                      |  
|Interest expense           |  | (207,676                   | ) |  | (270,333                  | ) |  | (843,268                               | )
|Net loss                   |  | (6,382,934                 | ) |  | (15,885,366               | ) |  | (17,297,980                            | )
|Basic and diluted loss per |  |                            |   |  |                           |   |  |                                        |  
|share                      |  | (0.06                      | ) |  | (0.14                     | ) |  | (0.15                                  | )

17

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

This Periodic Report on Form 10-Q may contain "forward-looking
statements". The terms "believe", "anticipate", "intend", "goal", "expect" and
similar expressions may identify forward-looking statements. These
forward-looking statements represent our current expectations or beliefs
concerning future events. The matters covered by these statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward-looking statements, including our
dependence on weather-related factors, the political conditions in the countries
in which we operate, the results of our exploration activities, the impact of
competition and price erosion, as well as supply and manufacturing restraints
and other risks and uncertainties. You should not construe the foregoing list as
exhaustive, and we disclaim any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after the date of
such statements, or to reflect the occurrence of anticipated or unanticipated
events. In light of the significant uncertainties inherent in the
forward-looking information included herein, you should not regard the inclusion
of such information as a representation that we will achieve our strategy,
objectives or other plans. We caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made.

You should read the following discussion and analysis in
conjunction with the unaudited consolidated Financial Statements and Notes
thereto included in this Form 10-Q. The discussion contains forward-looking
statements that involve risk and uncertainties. Our actual results and the
timing of certain events could differ materially from those discussed in these
forward-looking statements as a result of certain factors, including, but not
limited to, those set forth herein and elsewhere in this Form 10-Q.

Overview

We are a development stage company. Our growth strategy is
focused on petroleum exploration and development in selected Central Asian
countries of the former Soviet Union, in the Balkan Region and in Latin America.
In addition to our focus on these regions, we also take an opportunistic view on
projects outside the above regions. Our goal is to increase shareholder value
through the successful acquisition and exploration of oil and gas resources.

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 for the Nine Months Ended September
30, 2008 Compared to the Nine Months Ended September 30, 2007

In the nine months ended September 30, 2008, we had a net loss
  of $ 26,282,914 as
  compared to a net loss of $8,755,543 for the comparable period ended September
  30, 2007. Our net loss for the accounting period in 2008 is positively affected
  by revenues of $635,318, stemming from an option agreement with Santos International
  Ventures Pty Ltd. (Santos) of $558,696 and consulting revenues of
  $76,622. The corresponding period in 2007 is unaffected by revenue from operations
  as we had none in the period.

In the nine months ended September 30, 2008 our operating
expenses increased to $17,272,929 from $8,888,004 reported for the same period
in 2007. The 94% increase in our

18

---

total operating expenses is attributable to firstly,
exploration costs of $4,076,829 but secondly, also to several factors associated
with the increase in the size of our operations and the personnel needed to
carry out these operations. 47% of the total operating expenses, or $8,058,814,
for the period ended September 30, 2008 is related to stock-based or stock
option-based compensation payments, which are non-cash. Compared to the same
period in 2007, we recorded stock-based or stock option-based compensations of
$2,611,423.

Personnel costs

The number of employees increased three fold for the period
ended September 30, 2008 compared to the nine months ended September 30, 2007.
As a result, our personnel costs increased to $7,404,306 from $3,709,079. 70% of
the total personnel costs or the amount of $5,175,379 is related to a non-cash
charge for our stock compensation and stock option plan to obtain and retain
qualified management.

Exploration costs

For the period ended September 30, 2008
  we incurred exploration costs of $4,076,829 as compared to $151,552 for the
  corresponding period in 2007. The amount covers the expenses for our projects
  in Albania, Chile and Tajikistan as well as preliminary scouting in Mongolia.
  The exploration costs in Albania amount to $2,849,211 and include an environmental
  study, a volumetric and an economic report by an independent engineering consulting
  agency, reprocessing of data as well as a payment for the seismic work by Geological
  Institute of Israel (GII). In Chile, we have spent $254,148 for
  reprocessing data and finalizing the work program with our partners. The costs
  in Tajikistan amount to $781,657 for the first nine months in 2008. The costs
  in Mongolia amount to $191,813 for the nine months period ended September 30,
  2008.

Consulting fees

For the period ended September 30, 2008, we paid consulting
fees in the amount of $3,617,992 as compared to consulting fees of $914,635 for
the period ended September 30, 2007. This increase of 296% is primarily due to a
charge of $2,883,435 in the nine month period ended September 30, 2008 for stock
based and stock option based compensation, $2,500,781 of which resulted from a
March 2008 grant of stocks to consultants working on our operations in Albania
as payment for services.

Administrative costs

Our administrative costs of $2,137,094 declined from $4,104,720
during the period ended September 30, 2008. The sharp decrease is a result from
one-time compensation charges of $2,560,000 for the acquisition of DWM and the
public listing which took place in second quarter of 2007. Compared to the same
period in 2007, we have higher audit, legal and traveling costs.

Non-operating
  expense

Our non-operating
  expense increased by $9,439,775 as a result of a charge for the subsequent equity
  sales adjustment clause in most of the Companys warrant agreements.

Results of Operations for the Three Months Ended September
30, 2008 Compared to the Three Months Ended September 30, 2007

In the quarter ended September 30, 2008, we had a net loss of
  $ 15,885,366 as compared
  to a net loss of $3,246,127 for the quarter ended September 30, 2007. Our net
  loss for the third

19

---

quarter in 2008 is positively affected by revenues of $42,122,
stemming from consulting revenues. The corresponding period in 2007 is
unaffected by revenue from operations as we had none in the period.

In the quarter ended September 30, 2008, our operating expenses
of $6,267,148 increased from $3,330,103 as compared to the same period in 2007.
The increase is mainly attributable to the significant higher exploration costs
of $2,788,817 we had in the third quarter of 2008 compared to $105,651 for the
same period in 2007.

Personnel costs

The number of employees increased by 30% for the quarterly
period ended September 30, 2008 compared to the three months ended September 30,
2007. However, our personnel costs increased by 17% from $2,012,860 to
$2,347,406. 70% of the total personnel costs incurred in the third quarter of
2008, or $1,633,065, are related to a non-cash charge for our stock compensation
and stock option plan to obtain and retain qualified management.

Exploration costs

For the quarterly period ended September 30, 2008, we incurred
exploration costs of $2,788,817, as compared to $105,651 for the comparable
period in 2007. $2,367,699 are related to our project in Albania and include an
environmental study, a volumetric and an economic report by an independent
engineering consulting agency, reprocessing of data as well as a payment for the
seismic work by GII. In Chile, we spent $112,742 while the expenses for the
first exploration work program in Mongolia amounted to $181,813. The exploration
costs in Tajikistan amounted to $126,564 for the quarterly period ended
September 30, 2008.

Consulting fees

For the quarterly period ended September 30, 2008, we paid
consulting fees in the amount of $420,769, of which $127,551 were based on stock
based and stock option based compensation. For the corresponding period ended
September 30, 2007, total consulting fees amounted to $492,434, of which also
$127,551 were based on stock based and stock option based compensation. The
slight decrease by 15% is a result of no acquisition based consulting costs
being incurred during the third quarter of 2008.

Administrative costs

Our administrative costs declined slightly from $714,948 to
$695,284 during the quarterly period ended September 30, 2008. Compared to the
same period in 2007, we have higher audit, legal and travelling costs due to the
increase in size of our operations.

Liquidity and Capital Resources

Our cash balance as of September 30, 2008 was $10,457,063, of
which $9,115,000 is restricted to finance the bank guarantees for the first
phase of our work program in Albania (covering the seismic and geological and
geophysical (G&G) costs in Albania) and in Mongolia (covering the seismic
and G&G costs in Mongolia), leaving a balance of $1,342,063. Given the
turbulences on the global equity markets, we now anticipate that the planned
financing of up to $80,000,000 will take place from now until 2009.

On August 18, 2008, the Company successfully negotiated a
mezzanine tranche of bridge financing and raised proceeds of $1,860,000 through
the issuance of a contingently convertible loan.

20

---

On September 4, 2008, the Company conducted a private placement
pursuant to a Securities Purchase Agreement and raised proceeds of
$2,600,000.

In order to continue to fund operations for the next twelve
months and implement the geological work program for our projects particular in
Central Asia and the Balkan Region as well as 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.

Our capital commitments are disclosed in our Annual Report on
form 10-KSB for the year ended December 31, 2007. There has been no material
change in these commitments.

Operating Activities

Net cash outflow from operating activities of $ 6,819,874
  for the first nine months of 2008 has increased from $3,658,817 in the comparable
  period. This is mainly due to higher exploration costs compared to the same
  period in 2007.

Investing Activities

Net cash outflow from investing activities of $9,245,160 for
the first nine months of 2008 has increased from $74,043 in the comparable
period for 2007. This is mainly due to restricting cash of $9,115,000 for bank
guarantees for our projects in Albania and Mongolia. In the quarter ended
September 30, 2008, we have released $1,065,000 from the restricted cash account
in accordance with the Albanian government and as outlined in the two production
sharing contracts (PSC) for our Albanian assets, while we have put in
$4,000,000 for our two escrow accounts in Mongolia. The other items remain
largely unchanged and are not material.

Financing Activities

Net cash flow from financing activities of $8,858,456 for the
first nine months of 2008 has decreased from $12,862,728 in the comparable
period. In the period ended September 30, 2007, the majority of the cash flows
were related to the issuance of shares of common stock and warrants in
conjunction with the merger and a private placement carried out on July 31,
2007, while in the period ended September 30, 2007, we sold 4,000,000 units. We
have issued debentures of $3,760,000 and detachable warrants with the debentures
of $240,000 in the quarter ended June 30, 2008. Furthermore, we have issued
contingently convertible loans of $2,000,000 (net proceeds of $1,860,000) as
well as equity and warrants in a private placement of $2,600,000 during the
third quarter ended September 30, 2008. Additionally, we received a one year
bank loan of $1,220,000 during the quarterly period ended September 30,
2008.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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Recent Developments

We are primarily focused on our operations in Albania, Kyrgyz
Republic, Tajikistan, and Chile. Furthermore, we are targeting the acquisition
of exploration blocks in Mongolia. Since the end of our most recent fiscal year,
various developments have affected these operations.

Albania

On July 31, 2007, we signed two Production Sharing Contracts
(PSC) with the Albanian National Agency of Natural Resources, and on December
13, 2007, the council of Ministers ratified the contracts. The contracts cover
approximately 766,000 acres (or approximately 3,100 km2) and set out
minimum work and expenditure requirements for three phases. If all three phases
under the contracts are completed, they will take seven years to complete and
will require a minimum expenditure of $15,620,000 for each set of blocks if we
complete all three phases. We have begun the first phase.

Since January 1, 2008, the following developments have taken
place in connection with our operations in Albania:

Geologists and Geophysicists of our team in Albania were
preparing a seismic program for 400 km of 2-D linear seismic. The seismic lines
have been defined and mapped. An environmental study was performed, presented
and approved for the seismic program from local authorities and from the
Ministry of Economy, Trade and Energy. External seismic crews have realized
field trips to all four blocks and prepared offers for the tender. A contract
for this project has been signed with the Geophysical Institute of Israel (GII).
GII commenced with the first part (189 km of 2-D seismic) of the program and
realized by the end of September 30, 2008, 147 km of 2-D seismic. A revised
technical study including resource estimates and an economic study was made by
an independent consultant. The reprocessing of selected lines (800 km) from
previous seismic explorations was finished. The digitized data are transferred
into modern scripts and are loaded on the geological software of the team. A
number of field trips were made to optimize the construction of roads for the
drilling trucks. Different technical options and parameters for performing the
seismic were evaluated.

Kyrgyz Republic

We have a 25% interest in South Petroleum JSC (SPC), which
has five licenses in the Kyrgyz Republic that cover a total area of
approximately 569,578 acres (or approximately 2,305 km2). We
previously sold a 70% interest in SPC to Santos International Holding Pty Ltd.
As part of this sale, Santos agreed to undertake a work program on these
licenses in two phases, the first of which has already begun. While we will not
have to provide funds for any costs for this first phase of this work program,
we also do not anticipate that this program will generate any revenues in the
next twelve months.

Seismic operations began on September 30, 2007 in the western
  part of Batken oblast. By the end of the year 2007, 89.4 km had been acquired
  in the Tuzluk license. Towards the end of the year, severe winter weather had
  begun to hamper operations. This severe weather continued throughout January
  and into February and had a substantial impact on seismic operations. By March
  2008 weather conditions
  had improved and a total of 64.3 km was acquired in March in SPC acreage compared
  to 30.3km in January (7.7km) and February (22.5km) combined. Seismic acquisition
  in the Tuzluk license continued throughout April,

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May, and June and was completed towards the end of the second
quarter 2008 with a total of 315.4 km having been acquired in the Tuzluk license
(not including a 1.1km test line). Following completion of operations in the
Tuzluk licence in June 2008, the seismic crew moved to the Nanai licence on the
northern margin of the Fergana Basin on the border with Uzbekistan. The seismic
crew began operations on July 18, 2008 and during the third quarter recorded
100.2 km of seismic data. Line numbers recorded were 7, 4, 11, 10, 12, 3, 2.
Seismic operations in the Nanai were completed by the end of October 2008.

Negotiations are still underway for the introduction of a
second crew into the basin. It is hoped that this can be accomplished by
December 2008.

No health, safety & environmental incidents (HSE ) were
recorded during the quarter although Uzbek border guards detained two Kyrgyz
Geofisica staff in a disputed border area on July 12, 2008. They were released
unharmed. Since that time SPC has been working closely with the Kyrgyz border
guards to ensure no further such incidents occur. Land access proceeded without
incident.

Planning is underway for a program of shallow wells in the Soh
and Tuzluk license. It is hoped to start drilling these wells in the fourth
quarter.

The following activities have progressed:

- Preliminary interpretation
      of the new seismic data has been initiated in the Adelaide office.
- In addition to the seismic
      program several initiatives have been undertaken in relation to the seismic
      program. These include data exchange agreements with neighboring licenses
      and the provision of funds to Saratovneftegeofizika (SNG) (seismic contractors)
      for crew upgrades.
- The project team in
      Adelaide has been primarily engaged in technical review work to define prospects
      and leads.
- Consolidation of the
      database has been undertaken with data acquired in Bishkek transferred to
      the database in Adelaide. Reprocessing and scanning of Soviet era seismic
      data and digitizing of well logs have continued.
- The office in Bishkek
      has been involved in general office administration and management, building
      relationships with industry and government and resolving various local taxation
      issues

Since January 1, 2008, the following developments have taken
place in connection with South Petroleums operations in the Kyrgyz
Republic:

Seismic operations were initiated in the Tuzluk area on
September 30, 2007 and completed on June 27, 2008. The seismic crew base was
located in the village of Arka, near the Tajikistan border. The crew was engaged
in acquiring seismic over the Sulukta (Textonic) and Tuzluk (SPC) licenses and
in Somon Oil acreage across the border in Tajikistan.

Initial parameter testing was carried out and the subsequent
parameters adapted were agreed to correspond to USD/km rate of $6,970/km (VAT
not included).

During the months of January, February and March 94.6km of
seismic data was acquired on seismic lines 8, 10, 11, 12, 13, 14, 15, 18 and19.
Field stacks indicated moderate data quality.

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During April, May and June, 131.6kms of seismic were acquired
in the Tuzluk license on lines 2, 4, 5, 6, 7, 18, 19, 20, 21, 22, 23, 24, 26, 32
and 33. Full processing trials are underway with some encouraging results.

Operations were also conducted; starting in late December 2007,
across the border into Tajikistan on the first of a number of seismic line
extensions with the aim of obtaining long receiver offset data to improve
imagery of the Tuzluk subthrust leads. Such data will be available to SPC
through a trade agreement with Somon Oil. A total of 123km was acquired in the
Somon Oil Block by the end of June.

No safety incidents were recorded. Land access proceeded
smoothly without incident. Planning for drilling is ongoing with the appointment
of a Drilling Manager, Alistair Chomley to the SPC Bishkek Office. A Drilling
HSE Manager has also been appointed to the SPC office together with support
staff.

Work has been underway to assess rig availability,
infrastructure, import and transport routes, import procedures, national and
local planning, and contractual requirements and preliminary location and access
scouting for the drilling of up to four deep wells in 2009.

Long lead items acquired for the deep drilling program are
currently under storage in Indonesia. Discussions are also underway with Caspian
Oil and Gas for a shallow drilling program of 2-4 wells in the Soh and Tuzluk
licenses. Caspian will use their 850HP rig in this operation. Discussions are
underway between SPC, and Caspian/Sherik to ensure the rig is operationally
ready for the planned program.

The likely commencement of a deep drilling program will not occur
  until the second quarter of 2009. Commencement of a shallow program may occur
  during the fourth quarter of 2008. The following is a summary of the Adelaide
  Office activities until end of September 2008: A team from Santos Adelaide has
  been responsible for integrating the new data into prior data sets and generating
  new prospects and leads for future drilling. The following summarizes the work
  carried out;

Database

- On-going database assembly
      with:
    Digitization of
          well wire line log data
      Rectification of
          scanned maps
      Field GPS quality
          control of well head locations, and incorporation into Santos mapping
          and seismic interpretation packages continued (DBMap and Geoframe)
      Capture of relevant
          information from Soviet-era reports
      Wireline log and
          seismic data loaded into Geoframe master interpretation project
      Formation tops data
          continued to be assembled and bulk loaded into Geoframe interpretation
          package
- Digitization of
          well wire line log data
- Rectification of
          scanned maps
- Field GPS quality
          control of well head locations, and incorporation into Santos mapping
          and seismic interpretation packages continued (DBMap and Geoframe)
- Capture of relevant
          information from Soviet-era reports
- Wireline log and
          seismic data loaded into Geoframe master interpretation project
- Formation tops data
          continued to be assembled and bulk loaded into Geoframe interpretation
          package

Seismic Reprocessing, Scanning & Acquisition

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- Seismic reprocessing
      project is complete.
- Scanning seismic project
      by SNG is completed.
- All original hardcopy
      seismic was scanned in Australia by contractor New Wave to provide a further
      dataset, which is being utilized as a final quality check against the reprocessed
      and SNG scanning. This data set was found to be more workable and has been
      used for current mapping.
- Geophysical interpretation
      of digital seismic is proceeding.

Seismic Interpretation & Mapping

- Seismic interpretation
      and mapping continued in each of the Tuzluk, Soh, West Soh, and Nanai permits.
- Mapping has been incorporated
      into plans for proposed new seismic acquisition, with minor adjustments
      being made to the location of lines in the 2D acquisition grid.

Geological & Geophysical work

- Rock sample petrography
      and geochemistry reports completed.
- Integration of well
      velocity data and wireline log data into seismic interpretation project.
- Geological well to well
      correlations.
- Thermal history modeling.

The following is a summary of the Bishkek Office activities
until the end of September 2008:

- Presentations have been
      made to the State Agency of Geology (New Director) outlining the progress
      made in relation to seismic acquisition.
- Discussions with the
      State Agency and others concerning the new Sub Soil laws and the proposed
      imposition of license fees continued and representations made through the
      IBC (International Business Council). These discussions are ongoing at the
      present time.
- General license administration
      and reporting continued during the quarter and half yearly reports were
      prepared.
- Digitizing of electric
      logs and maps continued during the period.
- Continued to build in-country
      relationships with industry and government.
- The Jalalabad office
      provided support to the seismic field operations and to drilling planning.

Tajikistan

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On July 25, 2007, the Tajikistan government awarded our
subsidiary, CJSC Somon Oil Company (Somon), an exploration license in Novobod
Tajikistan covering approximately 303,198 acres (or approximately 1,227
km2). We anticipate the Tajikistan government granting Somon a North
Tajik license in the near future. We have a 90% equity interest in Somon with
the other 10% interest held by the Tajik company Anawak LLC.

We have entered into an Option Agreement with Santos. Under the
Option Agreement, Santos will pay an amount equivalent to the seismic
acquisition costs in the Tajik area (approximately USD1.3 million) in
consideration for an option to farm-in to Somon's prospecting licenses. If
Santos were to exercise its option to enter into a Farm In Agreement, Santos
would acquire a 70% interest from us in Somon in exchange for certain
expenditure commitments for the exploration and development of the licenses.

In connection with the option agreement, Somon has entered into
a seismic agreement with SNG under which SNG is to carry out approximately 110
km of 2-D seismic acquisition in Tajikistan. This agreement underlies the option
agreement and is designed to meet a condition set by the Tajik authorities,
whereby once work has commenced in the West licence, an additional licence area,
the North Tajik license, may be granted to Somon.

Since January 1, 2008, the following developments have taken
place in connection with Somons operations in Tajikistan:

Starting in late December operations across the border into
Tajikistan were conducted on the first of a number of seismic line extensions
with the aim of obtaining long receiver offset data to improve imagery of the
Tuzluk subthrust leads. Such data will be available to SPC through a trade
agreement with Somon Oil.

The performance of the seismic operation has improved in March
following the improvement in weather and the introduction of a drilling team
from SNG Tajikistan. Every effort has been made to improve crew efficiency, with
an objective of lifting production rates to an average of 4km/day target. In the
second quarter of 2008, a total of 107.88km of 2D seismic were acquired. A total
of 123km were acquired in the Somon Oil Block by the end of June. No safety
incidents were recorded. Land access proceeded smoothly without incident.

Chile

On November 21, 2007, IPR and Manas were awarded the onshore
Tranquilo Block by ENAP (Empresa Nacional del Petróleo-Chile) in the first
exploration round in Chile, this award was memorialized in a final document with
the Chilean Ministry during a ceremony chaired by the Chilean President Michele
Bachelet. The block, the largest among the 10 exploration blocks offered (6,760
km2), is situated in the Magallanes Basin in the southern part of
Chile, with high exploration potential acreage with fields and infrastructure
nearby.

Since January 1, 2008, the following developments have taken
place in connection with our consortiums operations in Chile:

Manas and its partner, Independent Petroleum Resources (IPR),
who won a tender in the Magallanes Basin have been negotiating with the Chilean
Ministry the exploration and development contracts. The contract (CEOP) was
signed in an official ceremony on April 30, 2008 and ratified by the ministry.
Manas incorporated the Chilean company Manas Energia Chile limitada which is
holding the license.

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On April 29, 2008, Manas and IPR entered into a farm-out
agreement with Geopark and Pluspetrol. Manas and IPR will each hold 20% of the
project and Geopark and Pluspetrol will each hold 30%. An application for the
transfer of the shares to the Ministry was made after the ratification of the
Tranquillo block licenses. If this is approved, the operatorship will be
transferred from IPR to Geopark, who is already operating a block in the
Magallanes basin.

Geopark presented first operational activities to IPR,
Pluspetrol and Manas including a preliminary project plan for phase 1, results
of scouting with a seismic crew and geological interpretation of the
prospects.

One of the first activities of Geopark after the operatorship
will be officially transferred will be reprocessing and reinterpretation of
existing 1,428km 2D seismic and evaluation of the existing wells to determine
future drilling prospects and possible production opportunities in 2009.

Mongolia

In July 2008, Manas won the tenders for Blocks 13 and 14. Both
Blocks are expected to be ratified during the fourth quarter of 2008. Manas
geologists supported by experts from GII and the University of Novosibirsk have
completed a highly successful Phase 1 field work program defining structural
trends with potential petroleum accumulations. Based on these results and
previous data the company is currently designing a seismic acquisition program
expected to commence in 2009.

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Item 3. Quantitative and Qualitative Disclosure About Market
Risk

As we did not have to disclose quantitative and qualitative
information about our market risk as of and for our last fiscal year, this item
is not applicable to us at this time.

Item 4. Controls and Procedures.

As disclosed
  in Note 19 to our financial statements included in this Amended Quarterly Report
  on Form 10-Q, we have restated the financial statements for the quarter ended
  September 30, 2008.

The identification
  of these errors arose as a part of our annual financial statement audit.

In light of
  our determination that there were material inaccuracies in the financial information
  for the quarter ended September 30, 2008 which were included in the original
  Quarterly Report for the quarter ended September 30, 2008, our principal executive
  officer and principal financial officer have concluded that our disclosure controls
  and procedures were not effective in design and operation at the time of the
  original Quarterly Report for the quarter ended September 30, 2008.

There have
  been no changes in our internal control over financial reporting, that occurred
  during the quarter ended September 30, 2008 that has materially affected, or
  is reasonably likely to materially affect, the Companys internal control
  over financial reporting.

PART II

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

There have been no material changes to the risk factors
described in Part II, Item 1A "Risk Factors" included in the Form 10-Q for the
quarter ended March 31, 2008.

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

On September 4, 2008, we conducted a private placement pursuant
  to a Securities Purchase Agreement with two U.S.
  persons. Under the Securities Purchase Agreement, we sold 4,000,000 units for
  $2,600,000, or $0.65 per unit. Each unit consisted of one share of common stock,
  one warrant and an interest in rights granted to us by the Mineral Resources
  and Petroleum Authority of Mongolia with respect to certain production sharing
  contracts governing areas in Mongolia referred to as Blocks 13 & 14.

Each of the 4,000,000 warrants granted under the Securities
Purchase Agreement is exercisable for two years at $0.95 per warrant. The
warrants carry tag-along registration rights so that if we file a registration
statement (other than on Form S-4 or S-8), the holders may demand that the
shares underlying their warrants, as well as any shares from this private

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placement that are not eligible for the resale exemption from
registration provided by Rule 144 under the Securities Act of 1933, be included
in such registration statement. If no such registration statement is filed by
January 4, 2009, we have undertaken to use our best efforts to file a
registration statement for the shares underlying the warrants by May 4, 2009.

The units were issued to two US persons relying on the
exemption from the registration requirements of the Securities Act of 1933
provided by Section 4(2) of the Securities Act and Rule 506 thereunder.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

|Exhibit 31.1 | Certification
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                     
|------------ | ----------------------------------------------------------------------------------------------------------------------------------
|Exhibit 32.1 | Certification
      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002

29

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SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Manas Petroleum Corporation

*/s/
  Erik Herlyn*

|Name:  | Erik Herlyn                                                       
|------ | ------------------------------------------------------------------
|Title: | Chief Executive Officer, Interim Chief Financial
      Officer    
|       | Principal Executive Officer, Principal Financial
      Officer and
|       | Principal Accounting Officer                                      
|Date:  | April 15, 2009                                                    

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