----

----

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

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

----

| Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Page      No. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
| FINANCIAL      INFORMATION:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          |
|  Unaudited      Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |          |
|  Condensed      Consolidated Balance Sheets at March 31, 2008 and December 31,      2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  2       |
|  Condensed      Consolidated Statement of Operations for the Three Months Ended March 31,      2008 and 2007 and for the Period From Inception, May 25, 2004 to March 31,      2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   3 |
|  Condensed      consolidated Cash Flows Statements for the Three Months Ended March 31,      2008 and 2007 and for the Period From Inception, May 25, 2004 to March 31,      2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   4 |
|  Condensed      Consolidated Statement of Shareholders’ Equity/(Deficit)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  5       |
|  Notes      to the Condensed consolidated Financial      Statements                                                                                                                                   |  6       |

----

| MANAS PETROLEUM      CORPORATION                                                                                                                      |   |   |        |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| (A DEVELOPMENT STAGE      COMPANY)                                                                                                                    |   |   |        |   |
| CONDENSED CONSOLIDATED FINANCIAL      STATEMENTS                                                                                                      |   |
| UNAUDITED                                                                                                                                             |   |   |        |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |
| CONDENSED CONSOLIDATED BALANCE      SHEETS                                                                                                            |   |   |        |   |
|                                                                                                                                                  |   |   |        |   |   |   |
|                                                                                                                                                  |   |   | 03.31.2008  |   |   |   | 12.31.2007 |   |
|                                                                                                                                                  |   | USD    |        |   | USD    |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| ASSETS                                                                                                                                                |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Cash and cash      equivalents                                                                                                                        |   |   | 6,556,581   |   |   |   | 8,480,771 |   |
| Accounts      receivable                                                                                                                              |   |   | 183,170     |   |   |   | 148,346 |   |
| Prepaid      expenses                                                                                                                                 |   |   | 99,656      |   |   |   | 125,923 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total current      assets                                                                                                                             |   |   | 6,839,406   |   |   |   | 8,755,040 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Tangible fixed      assets                                                                                                                            |   |   | 168,476     |   |   |   | 153,074 |   |
| Investment in      associate                                                                                                                          |   |   | 238,304     |   |   |   | 238,304 |   |
| Other non-current      assets                                                                                                                         |   |   | 62,279      |   |   |   | 62,279 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total non-current      assets                                                                                                                         |   |   | 469,059     |   |   |   | 453,657 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| TOTALASSETS                                                                                                                                           |   |   | 7,308,465   |   |   |   | 9,208,697 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS'      EQUITY                                                                                                             |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Bank    overdraft                                                                                                                                     |   |   | 463         |   |   |   | 2,305 |   |
| Accounts      payable                                                                                                                                 |   |   | 109,206     |   |   |   | 110,156 |   |
| Accrued expenses Albania      fees                                                                                                                    |   |   | -           |   |   |   | 400,000 |   |
| Accrued expenses      VAT                                                                                                                             |   |   | 329,144     |   |   |   | 264,984 |   |
| Accrued expenses Professional      fees                                                                                                               |   |   | 490,894     |   |   |   | 408,862 |   |
| Other accrued      expenses                                                                                                                           |   |   | 160,314     |   |   |   | 168,192 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total current      liabilities                                                                                                                        |   |   | 1,090,020   |   |   |   | 1,354,499 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Loan owed to a      shareholder                                                                                                                       |   |   | 27,979      |   |   |   | 39,329 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total non-current      liabilities                                                                                                                    |   |   | 27,979      |   |   |   | 39,329 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| TOTAL      LIABILITIES                                                                                                                                |   |   | 1,118,000   |   |   |   | 1,393,828 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Common stock (300,000,000 shares      authorized, USD 0.001 par value, 113,526,381 and 112,156,488 shares,      respectively, issued and outstanding) |   |   | 113,526     |   |   |   | 112,156 |   |
| Additional paid-in      capital                                                                                                                       |   |   | 26,086,846  |   |   |   | 21,550,636 |   |
| Deficit accumulated during the      development stage                                                                                                 |   |   | (20,068,062 | )      |   |   | (13,904,456 | ) |
| Accumulated other comprehensive      income                                                                                                           |   |   | 58,154      |   |   |   | 56,533 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| Total shareholders'      equity                                                                                                                       |   |   | 6,190,466   |   |   |   | 7,814,870 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |
| TOTAL LIABILITIES AND      SHAREHOLDERS' EQUITY                                                                                                       |   |   | 7,308,465   |   |   |   | 9,208,697 |   |
|                                                                                                                                                  |   |   |        |   |   |   |   |   |

----

| MANAS PETROLEUM      CORPORATION                           |   |                            |        |   |        |   |        |              |       |
|------------------------------------------------------------|--------|---------------------------------|-------------|--------|-------------|--------|-------------|-------------------|------------|
| (A DEVELOPMENT STAGE      COMPANY)                         |   |                            |        |   |        |   |        |              |       |
| CONDENSED CONSOLIDATED FINANCIAL      STATEMENTS           |   |                            |        |   |
| UNAUDITED                                                  |   |                            |        |   |        |   |        |              |       |
|                                                       |   |                            |        |   |        |   |        |              |       |
|                                                       |   |                            |        |   |        |   |        |              |       |
| CONDENSED CONSOLIDATED STATEMENTS      OF OPERATIONS       |   |                            |        |   |
|                                                       |   |                            |        |   |        |   |        |              |       |
|                                                       |   | For the three months      ended |        |   | Period from |   |
|                                                       |   |                            |        |   |        |   |        |              | 05.25.2004 |   |
|                                                       |   |                            |        |   |        |   |        | (Inception)    to |       |
|                                                       |   |                            | 03.31.2008  |   |        |   | 03.31.2007  |              |       |   | 03.31.2008 |   |
|                                                       |   | USD                             |        |   | USD         |   |        | USD               |       |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| OPERATING      REVENUES                                    |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Other    revenues                                          |   |                            | -           |   |        |   | -           |              |       |   | 740,409 |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Total    revenues                                          |   |                            | -           |   |        |   | -           |              |       |   | 740,409 |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| OPERATING      EXPENSES                                    |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Personnel    costs                                         |   |                            | (2,565,657  | )      |        |   | (21,741     | )                 |       |   | (8,559,792 | ) |
| Exploration      costs                                     |   |                            | (261,612    | )      |        |   | -           |              |       |   | (1,636,594 | ) |
| Depreciation                                               |   |                            | (9,684      | )      |        |   | (235        | )                 |       |   | (56,316 | ) |
| Consulting    fees                                         |   |                            | (2,811,271  | )      |        |   | (196,406    | )                 |       |   | (6,543,350 | ) |
| Administrative      costs                                  |   |                            | (622,946    | )      |        |   | (206,765    | )                 |       |   | (8,115,505 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Total operating      expenses                              |   |                            | (6,271,171  | )      |        |   | (425,147    | )                 |       |   | (24,911,557 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Gain from sale of      investment                          |   |                            | -           |   |        |   | -           |              |       |   | 3,864,197 |   |
| Loss from sale of      investment                          |   |                            | -           |   |        |   | -           |              |       |   | (900 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| OPERATING    LOSS                                          |   |                            | (6,271,171  | )      |        |   | (425,147    | )                 |       |   | (20,307,850 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| NON-OPERATING INCOME /      (EXPENSE)                      |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Exchange      differences                                  |   |                            | 61,938      |   |        |   | (21,706     | )                 |       |   | (27,005 | ) |
| Interest    income                                         |   |                            | 49,251      |   |        |   | 5,375       |              |       |   | 392,601 |   |
| Interest      expense                                      |   |                            | (2,686      | )      |        |   | (2,149      | )                 |       |   | (84,325 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Loss before taxes and equity in      net loss of associate |   |                            | (6,162,668  | )      |        |   | (443,626    | )                 |       |   | (20,026,580 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Taxes                                                      |   |                            | (937        | )      |        |   | (135        | )                 |       |   | (2,611 | ) |
| Equity in net loss of      associate                       |   |                            | -           |   |        |   | -           |              |       |   | (24,523 | ) |
| Minority interest in net      income                       |   |                            | -           |   |        |   | -           |              |       |   | (18,700 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Net loss                                                   |   |                            | (6,163,605  | )      |        |   | (443,760    | )                 |       |   | (20,072,414 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Weighted average number of      outstanding shares         |   |                            | 112,577,994 |   |        |   | 100,110,400 |              |       |   | 103,118,891 |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
| Basic and diluted loss per      share                      |   |                            | (0.05       | )      |        |   | (0.00       | )                 |       |   | (0.19 | ) |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |
|                                                       |   |                            |        |   |        |   |        |              |       |   |   |   |

----

| MANAS PETROLEUM      CORPORATION                                         |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|--------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|---------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|
| (A DEVELOPMENT STAGE      COMPANY)                                       |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| CONDENSED CONSOLIDATED FINANCIAL      STATEMENTS                         |                                                                                                          |   |
| UNAUDITED                                                                |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| CONDENSED CONSOLIDATED CASH FLOW      STATEMENT                          |                                                                                                          |   |                                                                                                          |                                                    |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     | For the three months      ended                                                                               |   |  Period      from                                                                                        |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |  05.25.2004                                                                                              |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |  (Inception)      to                                                                                     |
|                                                                     | 03.31.2008                                                                                                    |   | 03.31.2007                                                                                                    |                                                    |  03.31.2008                                                                                              |
| OPERATING      ACTIVITIES                                                | USD                                                                                                           |   | USD                                                                                                           |                                                    |  USD                                                                                                     |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Net loss for the      period                                             |     (6,163,605)                                                                           |   |        (443,760)                                                           |                                                    |   (20,072,414)                                                                                      |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| To reconcile net loss to net cash      outflow from                      |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| operating      activities                                                |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Minority interest in net      income                                     |                   - |   |                   - |                                                    |           18,700                                            |
| Gain from sale of      investment                                        |                   - |   |                   - |                                                    |     (3,864,197)                                                                           |
| Loss from sale of      investment                                        |                   - |   |                   - |                                                    |                900                 |
| Equity in net loss of      associate                                     |                   - |   |                   - |                                                    |           24,523                                            |
| Depreciation                                                             |             9,684                                 |   |                235                 |                                                    |           56,316                                            |
| Exchange      differences                                                |          (61,938)                                                |   |           21,706                                            |                                                    |           27,005                                            |
| Stock-based      compensation                                            |      4,537,580                                                                       |   |                   - |                                                    |    11,782,869                                                                                  |
| Increase in      receivables                                             |            (8,557)                                     |   |          (21,242)                                                |                                                    |        (277,631)                                                           |
| Increase in other non-current      assets                                |                   - |   |                   - |                                                    |          (62,279)                                                |
| Decrease in accounts      payables                                       |               (950)                     |   |          (34,997)                                                |                                                    |        (427,116)                                                           |
| (Decrease) / increase in accrued      expenses                           |        (261,686)                                                           |   |          (33,667)                                                |                                                    |         908,930                                                       |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Cash flow from operating      activities                                 |     (1,949,471)                                                                           |   |        (511,726)                                                           |                                                    |   (11,884,393)                                                                                      |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| INVESTING      ACTIVITIES                                                |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Purchase of tangible fixed assets      and computer software             |          (25,086)                                                |   |                   - |                                                    |        (303,834)                                                           |
| Sale of tangible fixed assets and      computer software                 |                   - |   |                   - |                                                    |           79,326                                            |
| Proceeds from sale of      investment                                    |                   - |   |                   - |                                                    |      4,000,000                                                                       |
| Acquisition of investment in      associate                              |                   - |   |                   - |                                                    |          (67,747)                                                |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Cash flow from investing      activities                                 |          (25,086)                                                |   |                   - |                                                    |      3,707,745                                                                       |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| FINANCING      ACTIVITIES                                                |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Contribution share capital      founders                                 |                   - |   |                   - |                                                    |           80,019                                            |
| Issuance of      units                                                   |                   - |   |                   - |                                                    |    13,208,055                                                                                  |
| Cash arising on      recapitalization                                    |                   - |   |                   - |                                                    |             6,510                                 |
| Shareholder loan      repaid                                             |          (11,350)                                                |   |        (206,739)                                                           |                                                    |     (3,357,853)                                                                           |
| Shareholder loan      raised                                             |                   - |   |                   - |                                                    |      4,653,720                                                                       |
| (Decrease) / increase in bank      overdraft                             |            (1,842)                                     |   |             3,993                                 |                                                    |                463                 |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Cash flows from financing      activities                                |          (13,192)                                                |   |        (202,745)                                                           |                                                    |    14,590,913                                                                                  |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Net change in cash and cash      equivalents                             |     (1,987,749)                                                                           |   |        (714,471)                                                           |                                                    |      6,414,265                                                                       |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Cash and cash equivalents at the      beginning of the period            |      8,480,771                                                                       |   |      1,090,098                                                                       |                                                    |                   - |
| Currency translation effect on      cash and cash equivalents            |           63,559                                            |   |          (21,749)                                                |                                                    |         142,316                                                       |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Cash and cash equivalents at the      end of the period                  |      6,556,581                                                                       |   |         353,878                                                       |                                                    |      6,556,581                                                                       |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Supplement schedule of non-cash      investing and financing activities: |                                                                                                          |   |                                                                                                          |                                                    |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |
| Forgiveness of debt by      shareholder                                  |                                                                                                          |   |                                                                                                          |                                                    |      1,466,052                                                                       |
| Deferred consideration for      interest in CJSC South Petroleum Co.     |                                                                                                          |   |                                                                                                          |         193,003 |
| Warrants issued to pay placement      commission expenses                |                                                                                                          |   |      2,689,910                                                                       |                                                    |      2,689,910                                                                       |
|                                                                     |                                                                                                          |   |                                                                                                          |                                                    |                                                                                                          |

----

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

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| 2008                                       |  Office Equipment &      Furniture                                                                                                                                                                                           |  Vehicles                                                                                                                                                                                                                        |  Leasehold      Improvements                                                                                                                                                                                                     |  Total                                                                                                                                 |
|--------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|                                       |  USD                                                                                                                                                                                                                             |  USD                                                                                                                                                                                                                             |  USD                                                                                                                                                                                                                             |  USD                                                                                                                                   |
| Cost at January      1                     |                 77,845                                                                                                                                |                 53,000                                                                                                                                |                 42,424                                                                                                                                |               173,269                                                 |
| Additions                                  |                              20,135                                                  |                                       - |                               4,952                                             |                 25,086                                      |
| Disposals                                  |                                       - |                                       - |                                       - |                        - |
| Cost at March      31                      |                 97,980                                                                                                                                |                 53,000                                                                                                                                |                 47,376                                                                                                                                |               198,355                                                 |
|                                       |                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |                                                                                                                                        |
| Accumulated depreciation at      January 1 |                (10,471)                                                                                                                                    |                 (9,000)                                                                                                                               |                   (,724)                                                                                                                    |                (20,195)                                          |
| Depreciation                               |                             (4,748)                                                       |                             (2,650)                                                       |                             (2,287)                                                       |                 (9,684)                                     |
| Disposals                                  |                                       - |                                       - |                                       - |                        - |
| Accumulated depreciation at March      31  |                (15,218)                                                                                                                                    |                (11,650)                                                                                                                                    |                  (3,010)                                                                                                                         |               (29,879)                                                |
|                                       |                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                  |                                                                                                                                        |
| Net book value at March      31            |                 82,761                                                                                                                                |                 41,350                                                                                                                                |                 44,365                                                                                                                                |               168,476                                                 |

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

| Board of      directors                                                                          | 01.01.-03.31.08                                                                                                                                              | 01.01.-03.31.07                                                                                                                                                                                         |
|--------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                             | USD                                                                                                                                                          | USD                                                                                                                                                                                                     |
| Payments to a director for office      rent                                                      |                          42,959 |                                  - |
| Payments to related companies      controlled by directors for rendered consulting      services |  -                                                                                                                                                      |                        138,079                                                       |
|                                                                                             |                                                                                                                                                         |                                                                                                                                                                                                    |
|                                                                                             |  03.31.08                                                                                                                                               |  03.31.07                                                                                                                                                                                          |
|                                                                                             |  USD                                                                                                                                                    |  USD                                                                                                                                                                                               |
| Loan from a      director                                                                        |                          27,979 |                        203,182                                                       |

----

|                               |   | March 31,    2008 |      |   | March 31,    2007 |   |
|------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|
|                               |   | USD               |      |   | USD               |   |
| Wages and      salaries            |   |              | 2,516,489 |   |              |   | 16,459 |   |
| Social security      contributions |   |              | 26,179    |   |              |   | 3,602 |   |
| Pension fund      contribution     |   |              | 22,989    |   |              |   | 989 |   |
| Other personnel      expenses      |   |              | 0         |   |              |   | 691 |   |
| Total Personnel      Costs         |   |              | 2,565,657 |   |              |   | 21,741 |   |

|                               |   | Dec 31,2007 |      |   | Dec 31,2006 |   |    | Dec 31,2005 |   |
|------------------------------------|--------|-------------|-----------|--------|-------------|--------|---------|-------------|--------|
|                               |   | USD         |      |   | USD         |   |    | USD         |   |
| Wages and      salaries            |   |        | 5,626,449 |   |        |   | 142,902 |        |   |   | 125,033 |   |
| Social security      contributions |   |        | 55,387    |   |        |   | 19,038  |        |   |   | 22,193 |   |
| Pension fund      contribution     |   |        | 35,478    |   |        |   | 4,076   |        |   |   | 397 |   |
| Other personnel      expenses      |   |        | 1,691     |   |        |   | 799     |        |   |   | - |   |
| Total Personnel      Costs         |   |        | 5,719,005 |   |        |   | 166,815 |        |   |   | 147,623 |   |

----

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

----

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

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

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

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

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

| ·   | Seismic      operations were initiated on September 30, 2007.  The seismic      crew base is located in the village of Arka, near the Tajikistan      border.  The crew is engaged in acquiring seismic over the      Sulukta (Textonic) and Tuzluk (SPC) licenses.  A total of 414 km      was planned for the Tuzluk license. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | During      October to December 2007, 89.4 km were acquired in the Tuzluk license on      seismic lines 16, 17, 25, 9, 30 and 31.  During the months of      January, February and March 2008 94.6kms were acquired on seismic lines      8,10,11,12,13,14,15,18,19, Field stacks indicated  moderate data      quality . Full processing trials are underway in  Australia. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | No      safety incidents were recorded.  Land access has proceeded      smoothly. |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | A      small community project was undertaken to provide equipment and materials      for an upgrade to the local Arka school gymnasium.  This has      been completed and has helped to cement relationships with the local      community. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | Long      lead item acquisition has commenced for the deep drilling program:      purchase of steel forgings to allow manufacture of four sets of wellheads      (US$ 112,000), liner hangers (US$140,000) and the purchase of casing      strings for two deep generic wells (US$5,404,000), currently scheduled as      tests in the Tuzluk and Soh permits. Well design has been based on a      Tuzluk South Lead preliminary prognosis (PTD 4200m  RGL). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      addition, discussions are underway with Caspian Oil and Gas for the use of      their 850HP rig in a potential shallow drilling program of 2-3 wells in      the Soh and Tuzluk licenses. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      present seismic acquisition rates consistently suggest the likely      commencement of a deep drilling program will not occur until the seond      quarter of 2009. Commencement of a shallow program may occur during thethe      third quarter of 2008. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

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

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

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

| o   | Capture      of relevant information from Sovietreports, |
|---------------|----------------------------------------------------------|

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

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

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

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

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

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

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

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

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

| ·   | Regional      structural framework and tectonic history models based on surface geology,      seismic, and literature review collated and presented for peer feedback at      internal Santos Geoscience Forum. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | Geological      well to well correlations (ongoing) |
|--------------------|-----------------------------------------------------|

| ·   | Multiple      core samples from the Palaeozoic, Palaeogene and Neogene were taken from      selected well locations for maturation studies (conducted by Alan Cook at      Keiraville Konsultants in Australia) and visual kerogen assessments      (Santos in-house evaluation).  This work is being utilized to      constrain thermal and burial history modeling being conducted along the      southern flank of the basin. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Tuzluk      and Soh prospects and leads have been prepared for Santos internal review      and audit during the first quarter of 2008, with a view to populating the      drilling inventory. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A      presentation was made to the State Agency of Geology (New Director)      outlining the progress made in relation to seismic acquisition during the      visit of Santos management inMarch. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | A      Drilling Planning Manager has been appointed and support staff have been      employed. |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | General      license administration and reporting continued during the      quarter. |
|--------------------|--------------------------------------------------------------------------------------|

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

| ·   | Undertook      a review of available drilling equipment and contractors in the Kyrgyzstan      area and supported preliminary investigations into the in-country      requirements for a drillingoperation. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| ·   | 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 December, an advance payment of US$600,000 (inclusive of VAT) was made      to SNG to facilitate equipment upgrades and bolster performance. This will      be recovered against invoicing for the first quarter of  2008      acquisition. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Manas      and its Partner Independent Petroleum Resources (IPR), who won a tender in      the Magellan’s Basin have been negotiating with the Chilean Ministry the      Exploration and Development contracts. The contract (CEOP) is ready for      signature in an official ceremony during the second quarter of 2008. Manas      is preparing the incorporation of a Chilean company which will hold the      licenses. Manas has investigated further exploration opportunities in      South America. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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There has been a limited trading market for our common stock onthe OTC Bulletin Board, and the bid and ask prices for our common stock havefluctuated widely. As a result, a stockholder may find it difficult to disposeof, or to obtain accurate quotations of the price of, our common stock. Thisseverely limits the liquidity of our common stock and has a material adverseeffect on the market price for our common stock and on our ability to raiseadditional capital. An active public market for shares of our common stock maynot develop, or if one should develop, it may not be sustained, and as a result,investors may not be able to resell the shares of our common stock that theyhave purchased and may lose all of their investment.

The price of our common stock may become volatile, which couldlead to losses by investors and costly securities litigation.

|   | ● | actual      or anticipated variations in our operating results,                                                                               |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | announcements      by us or our competitors of significant acquisitions, strategic      partnerships, joint ventures or capital commitments,  |
|   | ● | adoption      of new accounting standards affecting our industry,                                                                             |
|   | ● | additions      or departures of key personnel,                                                                                                |
|   | ● | sales      of our common stock or other securities in the open market,                                                                        |
|   | ● | conditions      or trends in our industry, and                                                                                                |
|   | ● | other      events or factors, many of which are beyond our  control.                                                                               |

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