FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549

MARK ONE

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

                For the quarterly period ended September 30, 1997
                                               ------------------

                                       OR

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

               For the transition period from ________ to ________

                          Commission File Number 0-9494

                          ASPEN EXPLORATION CORPORATION
              ----------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

         Delaware                                          84-0811316
-------------------------------                           -------------
(State or other jurisdiction of                           (IRS Employer
 incorporation or organization)                            I.D. Number)


             Suite 208, 2050 S. Oneida St., Denver, Colorado, 80224
             ------------------------------------------------------
               (Address of Principal Executive Offices)    (Zip Code)

                                 (303) 639-9860
                                 --------------


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                              Yes  [   ]   No  [ X ]

Indicate the number of shares  outstanding  of each of the  Issuer's  classes of
common stock as of the latest practicable date.

     Class                                   Outstanding at March 16, 1998
-----------------                            -----------------------------
  Common stock,
  $.005 par value                                    4,916,322


                                        1

<PAGE>



Part One.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                   September 30,      June 30,
                                                       1997            1997
                                                   -----------      -----------
                                                   (Unaudited)       (Audited)
Current Assets:
  Cash and cash equivalents ..................     $   761,375      $   238,465
  Precious metals ............................          18,823           18,823
  Accounts receivable, trade net of
   allowance for doubtful accounts of
   $12,495 ...................................         261,467           46,870
  Prepaid expenses ...........................           1,631            3,732
                                                   -----------      -----------
     Total current assets ....................       1,043,296          307,890
                                                   -----------      -----------
Investment in oil and gas properties,
  at cost (full cost method of
  accounting) ................................       1,412,009        1,315,458
  Less accumulated depletion and
    valuation allowance ......................        (907,194)        (899,694)
                                                   -----------      -----------
                                                       504,815          415,764
                                                   -----------      -----------
Property and equipment, at cost:
  Furniture, fixtures and vehicles ...........         143,559          143,559
  Less accumulated depreciation ..............        (111,171)        (108,098)
                                                   -----------      -----------
                                                        32,388           35,461
                                                   -----------      -----------
Undeveloped mining properties, at cost .......         134,394          134,354
                                                   -----------      -----------
Cash surrender value, life insurance .........         226,958          217,471
                                                   -----------      -----------

     TOTAL ASSETS ............................     $ 1,941,851      $ 1,110,940
                                                   ===========      ===========

                              (Statement Continues)
                 See notes to Consolidated Financial Statements

                                        2

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                  September 30,       June 30,
                                                       1997            1997
                                                   -----------      -----------
                                                   (Unaudited)       (Audited)
Current liabilities:
  Accounts payable and accrued
    expenses .................................     $    80,434      $   118,220
  Advances from joint owners .................       1,024,417          230,624

  Due to related parties .....................          90,159           72,391
  Notes payable - current ....................          44,600              -0-
                                                   -----------      -----------
  Total current liabilities ..................       1,239,610          421,235
                                                   -----------      -----------
  Notes payable - long term ..................         221,400          185,000
                                                   -----------      -----------
Stockholders' equity:

  Common stock, $.005 par value:
    Authorized: 50,000,000 shares
    Issued: At September 30, 1997 and
      June 30, 1997: 4,559,922
    Outstanding: At September 30, 1997
      and June 30, 1997: 4,456,322 ...........          22,799           22,799


  Capital in excess of par value .............       5,609,359        5,609,359
  Accumulated deficit ........................      (5,151,317)      (5,127,453)
                                                   -----------      -----------

  Total stockholders' equity .................         480,841          504,705
                                                   -----------      -----------
Total liabilities and stockholders'
  equity .....................................     $ 1,941,851      $ 1,110,940
                                                   ===========      ===========

                 See Notes to Consolidated Financial Statements

                                        3

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                        Three Months Ended
                                                           September 30,
                                                   ----------------------------
                                                           (unaudited)

                                                      1997              1996
                                                      ----              ----
                                               
Revenues:
  Oil and gas ................................     $   101,360      $    76,057
  Interest and other, net ....................           5,770            4,240
                                                   -----------      -----------
Total Revenues ...............................         107,130           80,297
                                                   -----------      -----------

Costs and expenses:
  Oil and gas production .....................           5,857            9,086
  Depreciation, depletion and
    amortization .............................          10,573           34,519

  Selling, general and administrative ........         114,564          174,061
                                                   -----------      -----------
Total Costs and Expenses .....................         130,994          217,666
                                                   -----------      -----------

NET INCOME (LOSS) ............................     $   (23,864)     $  (137,369)
                                                   ===========      ===========
Basic loss per common share ..................     $      --        $      (.03)
                                                   ===========      ===========

Weighted average number of common                    4,456,322        4,321,322
  shares outstanding .........................     ===========      ===========
  





                     The accompanying notes are an integral
                            part of these statements.

                                        4

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                             Three months
                                                          ended September 30,
                                                           1997        1996
                                                        ---------    ---------
Cash flows from operating activities:
Net (loss) ..........................................   $ (23,864)   $(137,369)
Adjustments to reconcile net income
  to net cash provided by (used in)
  operating activities:
Depreciation, depletion & amortization ..............      10,573       34,519
Decrease in precious metals .........................         -0-       72,244
Decrease (increase) in accounts
  receivable ........................................    (214,597)      13,965
(Increase) decrease in prepaid expense ..............       2,101       (5,112)
Increase in accounts payable and
  accrued expenses ..................................     756,007      106,877
Increase in due to related parties ..................      17,768       16,230
                                                        ---------    ---------
Net cash provided by operating
  activities ........................................     547,988      101,354
                                                        ---------    ---------
Cash flows from investing activities:
Proceeds - Return of equipment ......................         -0-        4,100
Development of oil & gas properties .................    (183,051)    (130,319)
Additions to undeveloped mining
  properties ........................................         (40)     (35,093)
Proceeds - Prospect fees ............................      86,500       77,826
Additions to cash surrender value ...................      (9,487)     (10,837)
                                                        ---------    ---------
Net cash used in investing activities ...............    (106,078)     (94,323)
                                                        ---------    ---------
Cash flows from financing activities:
Note from life insurance policy .....................      15,000          -0-
Note from officer ...................................       6,000          -0-
Note from consultant ................................      60,000          -0-
                                                        ---------    ---------
Net cash provided by financing
  activities ........................................      81,000          -0-
                                                        ---------    ---------
Net increase in cash ................................     522,910        7,031
                                                        ---------    ---------
Cash and cash equivalents,
  at beginning of period ............................     238,465      102,223
                                                        ---------    ---------
Cash and cash equivalents,
  at end of period ..................................   $ 761,375    $ 109,254
                                                        =========    =========
                     The accompanying notes are an integral
                            part of these statements.

                                        5

<PAGE>



                          ASPEN EXPLORATION CORPORATION

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                               September 30, 1997


Note 1 - Basis of Presentation

The accompanying unaudited, consolidated financial statements have been prepared
in  accordance  with Item 310 of  Regulation  S-B and do not  include all of the
information and footnotes required by generally accepted  accounting  principles
for complete consolidated  financial  statements.  In the opinion of management,
all  adjustments   (consisting  of  normal  recurring  adjustments)   considered
necessary for a fair presentation have been included.  Operating results for the
three months ended  September  30, 1997 are not  necessarily  indicative  of the
results  that may be expected  for the fiscal year ending June 30,  1998.  These
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes thereto  included in Form 10-KSB for the fiscal year ended
June  30,  1997,  which  is  available   without  cost  from  Aspen  Exploration
Corporation upon request.

Summary of Significant Accounting Policies
------------------------------------------

Aspen  Exploration  Corporation ("the Company") was incorporated on February 28,
1980 and is engaged in the business of  acquiring  and  developing  interests in
domestic oil and gas properties and gold and other mineral properties.

Through  November  1996,  the  Company  had oil and gas  operations  in Wyoming,
Montana, North Dakota, Colorado and California, after November 1996, principally
in California. The Company's primary mineral projects and targets of exploration
are in central Wyoming.

The Company has two wholly owned subsidiaries and owns a 50% interest in another
company. None of the subsidiaries have any assets, liabilities or operations.

During  fiscal year 1997 and the first two  quarters  of fiscal  year 1998,  the
Company experienced cash flow and liquidity problems; however, subsequently cash
flow has substantially  increased,  due to the drilling of two gas wells,  which
has allowed the Company to pay creditors and resume more normal operations.

A summary of the Company's significant accounting policies follows:

Consolidated financial statements
---------------------------------

The consolidated  financial  statements include the Company and its wholly-owned
subsidiaries,   Aspen  Gold  Mining   Company  and  Aspen  Recursos  de  Mexico.
Significant   intercompany   accounts  and  transactions,   if  any,  have  been
eliminated.

                                        6

<PAGE>



Note 1 - Basis of Presentation (Continued)

Statement of cash flows
-----------------------

For  statement  of  cash  flow  purposes,   the  Company  considers   short-term
investments  with  original  maturities  of  three  months  or  less  to be cash
equivalents.  Cash restricted from use in operations  beyond three months is not
considered a cash equivalent.

Management's Use of Estimates
-----------------------------

The preparation of financial  statements in conformity  with generally  accepted
accounting   principles  requires  management  to  make  certain  estimates  and
assumptions  that affect the reported  amounts of assets and liabilities and the
disclosure of contingent liabilities at the date of the financial statements and
reported  amounts of revenues and expenses  during the reported  period.  Actual
results could differ from those estimates.

The  mining  and oil  and gas  industries  are  subject,  by  their  nature,  to
environmental   hazards  and  cleanup  costs  for  which  the  Company   carries
catastrophe  insurance.  At this time,  management knows of no substantial costs
from environmental  accidents or events for which it may be currently liable. In
addition,  the Company's oil and gas business  makes it vulnerable to changes in
wellhead  prices of crude oil and natural gas. Such prices have been volatile in
the past and can be expected to be volatile in the future. By definition, proved
reserves  are based on current oil and gas  prices.  Price  declines  reduce the
estimated quantity of proved reserves and increase annual  amortization  expense
(which is based on proved reserves).

Financial Instruments
---------------------

The carrying value of current  assets and  liabilities  reasonably  approximates
their fair value due to their short maturity periods.  The carrying value of the
Company's  debt  obligations  reasonably  approximates  their  fair value as the
stated  interest rate  approximates  current market  interest rates of debt with
similar terms.

Precious metals
---------------

Precious  metals   inventories  are  valued  at  the  lower  of  cost  (specific
identification  method) or market.  There was no allowance for unrealized losses
against inventories due to market decline at September 30, 1997 or 1996.


                                        7

<PAGE>



Note 1 - Basis of Presentation (Continued)

Oil and gas properties
----------------------

The  Company  follows  the  "full-cost"  method  of  accounting  for oil and gas
properties.  Under this method, all costs associated with property  acquisition,
exploration and  development  activities,  including  internal costs that can be
directly  identified  with those  activities,  are  capitalized  within one cost
center.  No gains or losses are recognized on the sale or abandonment of oil and
gas properties, unless the disposition of significant reserves is involved.

Depletion  and   amortization   of  the  full-cost  pool  is  computed  using  a
unit-of-production method based on proved reserves as determined annually by the
Company and independent engineers. An additional depletion provision in the form
of a  valuation  allowance  is  made  if  the  costs  incurred  on oil  and  gas
properties, or revisions in reserve estimates, cause the total capitalized costs
of oil and gas  properties  in the cost  center  to  exceed  the  capitalization
ceiling.  The  capitalization  ceiling  is the sum of (1) the  present  value of
future net revenues  from  estimated  production  of proved oil and gas reserves
applicable to the cost center plus (2) the lower of cost or estimated fair value
of the cost center's unproved properties less (3) applicable income tax effects.
The  valuation  allowance  was $281,720 at September  30, 1997 and September 30,
1996.

Property and equipment
----------------------

Depreciation  and amortization of property and equipment are expensed in amounts
sufficient to relate the expiring costs of depreciable assets to operations over
estimated service lives,  principally using the straight-line method.  Estimated
service lives range from three to eight years. When assets are sold or otherwise
disposed of, the cost and accumulated depreciation are removed from the accounts
and any  resulting  gain  or  loss is  reflected  in  operations  in the  period
realized.

Investment in mining joint ventures
-----------------------------------

The Company  accounts for its  investments  in joint  ventures  using the equity
method.  Under the equity  method,  the  investment  is  accounted  for at cost,
adjusted for the Company's proportionate share of earnings and losses.

Undeveloped mining properties
-----------------------------

The Company  capitalizes  all costs  associated  with  acquiring,  exploring and
developing   mineral   properties,   including   certain  internal  costs  which
specifically  relate to each mining property area ("cost  center").  Capitalized
costs are  deferred  until the area of interest to which they relate is put into
operation,  sold, abandoned or impaired. The Company's pro rata share of advance
mineral royalties,  bonuses and other cash payments received by the Company from
joint  venture  or other  exploration  participants  reduce the amount of a cost


                                        8

<PAGE>



Note 1 - Basis of Presentation (Continued)

center as a recovery of capitalized  costs. The excess of the Company's pro rata
share of advance mineral royalties,  bonuses and other cash payments received by
the  Company  from  joint  venture  or  other   exploration   participants  over
capitalized  costs in a specific  cost center are  recognized  as revenue in the
period received. The Company's pro rata share of costs incurred by the Nome Gold
Joint Venture that are associated with finding joint venture partners to explore
and develop  mining  properties  are expensed as  incurred,  and are included in
selling,  general  and  administrative  expenses.  Gains  or  losses  on sale or
abandonment of mining properties are charged to current operations.

Net (loss) per common share
---------------------------

Net (loss) per common share is based on the weighted average number of shares of
common stock outstanding during the period.

Adoption of stock based compensation plan
-----------------------------------------

The Company utilizes APB 25 in accounting for its stock based compensation plan.
In November 1997 the Company adopted an employee stock based  compensation  plan
whereby  certain key  employees,  directors and  consultants  were granted stock
options.  The  exercise  price of the option was  determined  at the date of the
grant and approximates the fair market value of the stock on that date.  Options
were  granted  for  260,000  shares of common  stock on November 1, 1997 and are
exercisable  in 25%  increments  over four years at $0.20 per  share,  $0.24 per
share, $0.28 per share and $0.32 per share. At the measurement date of the stock
option grant,  the  exercisable  price of the option exceeded the discounted bid
price and no employee compensation was recorded.

Adoption of new accounting procedure
------------------------------------

Earnings per share
------------------

In February  1997, the Financial  Accounting  Standards  Board issued  Financial
Accounting  Standard No. 128 ("SFAS No.  128"),  addressing  earnings per share.
SFAS No. 128 changed  the  methodology  of  calculating  earnings  per share and
renamed the two calculations  basic earnings per share  (currently  primary) and
diluted earnings per share (currently fully diluted). The calculations differ by
eliminating any common stock equivalents (such as stock options,  warrants,  and
convertible  preferred  stock) from basic earnings per share and changes certain
calculations  when  computing  diluted  earnings  per  share.  SFAS  No.  128 is
effective for reporting  periods ending after December 15, 1997. The Company has
adopted SFAS No. 128 in fiscal year 1998.


                                        9

<PAGE>



Note 1 - Basis of Presentation (Continued)

Year 2000 Issue
---------------

The  Company  is aware of the issues  associated  with the  programming  code in
existing computer systems as the millennium (Year 2000) approaches. Accordingly,
as of December 31, 1997, the Company has converted all of its computer  software
to  accommodate  the  "Year  2000"  issue.  The  amount  expensed  in  1997  was
immaterial.

Note 2  Commitments and Contingencies

At September 30, 1997 the Company was  committed to the  following  drilling and
development projects in California:

         1.       Drill, complete and equip the Emigh 2-1 well.
         2.       Drill, complete and equip the Brandt 26X-27 well.
         3.       Drill, complete and equip the Compton Landing 97-1 well.
         4.       Install a pipeline and put the Arco 46X well on production.

Total costs for these projects was estimated to be $1,789,000, of which $270,000
was to be paid by the  Company.  As of  September  30,  1997,  the  Company  had
received approximately  $1,024,000 in prepayments from third party investors for
their share of the projects outlined above.

The Company has an employment  agreement  with its President  which provides for
compensation  of $125,000 per year (reduced  voluntarily  to $100,000  effective
February 1, 1998) to be paid, plus reimbursement of travel,  entertainment,  and
medical expenses, health insurance, and other benefits, including a split dollar
life  insurance  plan.  The  agreement  provides  for a two year  term  which is
automatically  renewable for two additional two year terms (through  November 8,
1999) at the president's  option. The Company is only entitled to terminate this
agreement upon the president's death, disability,  or for "cause" (as defined in
the agreement).

The president  may terminate the agreement if his duties for the Company  change
substantially from those he is currently performing,  or in the event there is a
"change of control" in the Company as defined in the agreement. If the president
terminates the agreement for either of the foregoing  reasons,  the Company will
be  obligated  to pay the  president  severance  pay in an  amount  equal to the
remaining  amount due under the agreement,  but not less than two years' salary.
This payment must be made in a lump sum to the  president  within thirty days of
his termination of the agreement.

The Company entered into an employment  agreement with Robert Cohan on April 16,
1997,  which  provides  for  the  payment  of  $85,000  for  the  first  year of
employment,  plus reimbursement of travel,  entertainment,  medical expenses and
certain office costs, including health insurance and the payments on a truck. If


                                       10

<PAGE>



Note 2   Commitments and Contingencies (Continued)

the Company wishes to employ Mr. Cohan for an additional 12 months and Mr. Cohan
wishes to continue  his  employment  with the  Company,  the renewal  employment
agreement is  effective  April 16, 1998 to April 15, 1999 at the rate of $90,000
per year.

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS

Liquidity and Capital Resources
-------------------------------

September 30, 1997 as compared to September 30, 1996
----------------------------------------------------

Registrant  has  sustained  operating  losses  in  recent  years.  In  addition,
Registrant has used substantial amounts of working capital in its operations. At
June 30, 1997  current  liabilities  exceeded  current  assets by  $113,345  and
Registrant had a working capital  deficit to that extent.  At September 30, 1997
current   liabilities   exceeded  current  assets  by  $196,314.   Consequently,
Registrant has been required to defer payment of certain  accounts payable which
were otherwise due.

In order to provide  interim  financing,  Registrant  has  withdrawn  $15,000 in
September,  1997 against a split dollar  insurance plan and borrowed $6,000 from
an officer.  Further, during August and October of 1997, Registrant has borrowed
an  additional  $130,000  to finance its share of drilling an offset well on the
Emigh property from an affiliate.  In addition,  officers of the Registrant have
elected to defer a portion of their salary and expense  reimbursements.  At June
30, 1997,  the amount due to officers was  approximately  $72,000 and $90,000 at
September  30, 1997.  At the time of this filing,  Registrant  owed its officers
approximately $122,000.

In view of its working  capital  deficit,  realization of a major portion of the
assets in the accompanying  balance sheet is dependent upon continued operations
of Registrant,  which in turn is dependent upon Registrant's ability to meet its
financing  requirements,  and  the  success  of  future  operations.  Management
believes that actions  presently being taken to revise  Registrant's  operations
and financial requirements provide the opportunity for Registrant to continue as
a going concern. In light of successful drilling operations by the Registrant in
recent months, increased revenues should reduce or eliminate the working capital
deficit and contribute  considerably to the Registrant's cash flow in the coming
year.

From  September 30, 1996 to September  30, 1997,  Registrant's  working  capital
decreased  by  $44,169  to a  negative  $196,314.  The  decrease  was due to the
expenditure of funds by Registrant for its necessary continuing  operations,  an
increase in current liabilities as officers agreed to defer salaries and expense
reimbursements,  and a  decrease  in  Registrant's  precious  metals  inventory.
Registrant  received  no  additional  revenues  from the sale of gold  following
October  1995  to  compensate  for  the  expenditures   and  increased   current
liabilities.  Therefore,  commencing  in fiscal  1996  Registrant  reviewed  all
aspects  of its  operations  in an  effort  to  reduce  expenditures  as much as


                                       11

<PAGE>



possible while making efforts to preserve  Registrant's assets and build up cash
flow. These decisions  included:  the sale of Registrant's oil and gas assets in
Montana, North Dakota,  Oklahoma and Texas; the decision to defer the payment of
portions  of  salaries  and  expense  reimbursements;   the  decision  to  defer
compliance with Registrant's reporting obligations under the Securities Exchange
Act of 1934, as amended,  and the decision to concentrate on the  development of
cash flow from oil and gas  operations  in  California,  in which a former  (now
current) officer of Registrant has significant experience. Based on Registrant's
view of the uranium industry,  Registrant also believed that the market would be
receptive to an attractive  uranium  prospect,  although since that decision was
made the market for uranium has not improved as management had anticipated.

These  decisions  resulted in  Registrant  sharing  certain oil and gas drilling
opportunities with third party investors  (including some affiliated  investors)
and taking a reduced  interest until after payout to the third party  investors.
Payout in several of the wells has occurred, and consequently  Registrant is now
receiving increased revenues from its oil and gas operations.  This commenced in
the first quarter of calendar year 1998.

Due to the  cessation  of  royalties  from the Valdez Creek gold mine in Alaska,
Registrant  does not have  sufficient cash flow to fully carry on all activities
as was  done  previously.  Management  made a  decision  to enter  into  uranium
exploration and promotion by acquiring  certain  uranium  properties in calendar
1995 and 1996. Registrant was financially unable to acquire the substantial land
positions needed to control a major part of the mineral rights on the Kaycee and
Shamrock prospects,  but Registrant has reached an agreement with a newly-formed
Toronto,  Ontario-based company whereby in February 1998 Registrant has received
a $50,000  cash payment and a commitment  to receive an  additional  $200,000 as
financing can be arranged in Canada. Management of the newly-formed company will
likely be based in Toronto.  Under the terms of the revised agreement reached in
March,  1998,  Registrant will also own approximately 25% (2,000,000  shares) of
the common stock of the newly-formed company.

Registrant knows of no market for the stock of this company and does not know if
any market will ever  develop;  thus the stock may prove to be of no value.  The
president  of  Registrant  is  expected  to provide  geological  and  logistical
consulting  services to the  newly-formed  company and Registrant  will bill the
newly-formed  company  for  those  services  as well as  out-of-pocket  expenses
related to the effort.

Management of Registrant  believes that both uranium  prospects are  prospective
for the production of uranium by in situ methods, although there is no assurance
such deposits will be found or may be exploited.


                                       12

<PAGE>



                              Results of Operations
                              ---------------------


September 30, 1997 Compared to September 30, 1996
-------------------------------------------------

For the three months ended September 30, 1997 Registrant's  operations continued
to be  focused  on the  production  of oil and gas,  and the  investigation  for
possible  acquisition  of  producing  oil  and  gas  properties  and  properties
prospective for uranium production.

Effective  November  1,  1996  Registrant  sold  its  interest  in  all  of  its
non-California  properties  for  $100,000.  Proceeds  from the sale were used to
reduce the basis of its full cost pool and no gain or loss was recognized on the
transaction.

During 1997,  Registrant  wrote off its  remaining  investment  in the Nome Gold
Joint Venture and Echo Canyon of  approximately  $13,000.  Registrant also wrote
off $30,500 in organizational costs relating to Aspen Recursos de Mexico and ISL
Resources Corporation.

Oil and gas revenues,  which includes income from management fees, for the three
months ended September 30, 1997 increased $3,339, from $27,681 to $31,020, a 12%
improvement.  This increase reflects increased emphasis on operations  conducted
in  California  and the  initial  production  from the Emigh lease which came on
stream in November, 1996.

Oil and gas production  expenses  decreased  $3,229 from $9,086 to $5,857, a 36%
decrease.  This decrease was due in large part to the sale of all non-California
properties  which had relatively high operating costs and higher  production tax
rates in November of 1996.  Also, at September 30, 1997  Registrant had a higher
percentage of gas wells than oil wells which typically have much lower operating
costs.

Depletion,  depreciation and amortization decreased significantly,  from $34,519
to $10,573, a $23,946 reduction or 69%. This reduction was due primarily because
of the sale of  marginal  short  lived  properties  in  November of 1996 and the
addition of longer lived gas reserves during the past 12 months.

Selling, general and administrative expenses decreased by $59,497 from September
30, 1996 to  September  30,  1997 from  $174,061 to  $114,564,  a 34%  decrease,
primarily because Registrant was no longer incurring legal bills associated with
the  Newmont  lawsuit  which was  settled in October,  1997.  After  preliminary
decisions adverse to Registrant, plaintiff and defendant agreed to a stipulation
whereby the  litigation,  including all claims,  was terminated  with each party
paying its own legal costs.

As a result of Registrant's  operations for the three months ended September 30,
1997,  Registrant  ended the quarter with a net loss of ($23,864)  compared to a
net loss of ($137,369) a year earlier.  This decrease of approximately  $113,500
reflected  an increase  in total  revenues  of $26,833  due  primarily  to newly
discovered  gas  production  coming  on  line  and a  substantial  reduction  in
operating costs and general and administrative expenses.

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<PAGE>




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


                                         ASPEN EXPLORATION CORPORATION
                                                   (Registrant)




                                         /s/ R. V. Bailey
                                         -------------------------------
                                         By:  R. V. Bailey,
March 16, 1998                                Chief Executive Officer,
                                              Principal Financial Officer

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