U. S. SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549


                                  FORM 10-Q-SB

(MARK ONE)

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995

[   ] TRANSITION REPORT UNDER 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




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


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

                                 (303) 639-9860


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

                                Yes [ X ] No [ ]

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

     Class                               Outstanding at February 1, 1996
  Common stock,
  $.005 par value                                 4,271,322



<PAGE>


Part One.  FINANCIAL INFORMATION
     Item 1.  Financial Statements

                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                           December 31,            June 30,
                                               1995                  1995
                                            ----------            ----------
                                           (Unaudited)             (Audited)
Assets
Current assets:
  Cash and equivalents................      $  453,963            $  116,891


  Precious metals.....................         471,059               718,388
  Accounts receivable.................          28,478                30,997
  Prepaid expenses and other..........           8,654                 4,651
                                            ----------            ----------
    Total current assets..............         962,154               870,927
                                            ----------            ----------
Investment in oil and gas properties,
  at cost (full cost method of
  accounting).........................       1,388,830             1,031,693
  Less accumulated depreciation,
    depletion, amortization and
    valuation allowance...............        (784,497)             (760,874)
                                            ----------            ----------
    Net oil and gas properties........         604,333               270,819
                                            ----------            ----------
Property and equipment, at cost:
  Furniture, fixtures and vehicles....         136,581               135,147
  Less accumulated depreciation and
    amortization......................        (110,228)             (104,348)
                                            ----------            ----------
    Net property and equipment........          26,353                30,799
                                            ----------            ----------
Undeveloped mining properties, at cost
  less reserve for impairment of
  $193,495............................          18,987                11,633
                                            ----------            ----------
Organization cost - Aspen Recursos de
  Mexico (Note 4).....................          26,860                29,187
                                            ----------            ----------


Cash Surrender Value, life insurance..         157,794               129,627
                                            ----------            ----------

    TOTAL ASSETS......................      $1,796,481            $1,342,992
                                            ==========            ==========
                              (Statement Continues)

                 See notes to Consolidated Financial Statements


<PAGE>


                  ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)



                                             December 31,           June 30,
                                                 1995                 1995
                                             ----------           ----------
                                             (Unaudited)           (Audited)
Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable & accrued expenses.       $  210,272           $   88,121

  Advances from joint owners..........          267,269                  -0-

  Severance taxes payable (Note 6)....           30,680               83,419

  Due to related parties..............            9,207                9,207
                                             ----------           ----------
Total liabilities.....................          517,428              180,747
                                             ----------           ----------
Stockholders' equity:
  Common stock, $.005 par value:
     Authorized: 50,000,000 shares
     Issued:  At December 31, 1995:
       4,374,922 and 4,297,922 at June
       30, 1995.......................           21,489               21,489
     Outstanding: At December 31, 1995
       4,271,322 and 4,194,322 at
       June 30, 1995..................
  Capital in excess of par value......        5,640,323            5,640,323

  Accumulated deficit.................       (4,336,005)          (4,452,813)
                                             ----------           ----------
                                              1,325,807            1,208,999
  Less common stock in treasury,
     at cost:  103,600 shares ........          (46,754)             (46,754)
                                             ----------           ----------
  Total stockholders' equity..........        1,279,053            1,162,245
                                             ----------           ----------

Total liabilities and stockholders'
equity................................       $1,796,481           $1,342,992
                                             ==========           ==========

                     The accompanying notes are an integral
                            part of these statements.


<PAGE>

<TABLE>
<CAPTION>

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

                                             Three Months Ended                         Six Months Ended
                                                December 31,                              December 31,
                                     --------------------------------           --------------------------------
<S>                                   <C>                   <C>                  <C>                 <C>
                                          1995                 1994                 1995                 1994
Revenues:                            -----------           -----------          -----------          -----------
  Oil and gas ..................     $    95,928           $    84,523          $   195,277          $   182,233
  Mineral ....................               -0-               277,250              246,589              522,575
  Alaska mining tax
   exemption (Note 6) ........               -0-                   -0-               45,000                  -0-
  Interest and other, net ....              (823)                  482                5,445                  605
                                     -----------           -----------          -----------          -----------
Total Revenues ...............            95,105               362,255              492,311              705,413
                                     -----------           -----------          -----------          -----------
Costs and expenses:
  Oil & gas production .......            13,839                58,203               20,885              146,371
  Loss on sale of
   precious metals ...........            36,552                 7,359               46,316               20,926
  Depreciation, depletion
   and amortization ..........            24,979                21,300               32,479               44,000
  Selling, general and
   administrative ............           118,369               141,179              275,823              312,797
                                     -----------           -----------          -----------          -----------
Total Costs & Expenses .......           193,739               228,041              375,503              524,094
                                     -----------           -----------          -----------          -----------

NET INCOME ...................       $   (98,634)          $   134,214          $   116,808          $   181,319
                                     ===========           ===========          ===========          ===========
Net Income per share .........       $      (.02)                  .03          $       .03                  .04
                                     ===========           ===========          ===========          ===========
Weighted average number of
 common shares outstanding ...         4,271,322             4,194,274            4,271,322            4,194,274
                                     ===========           ===========          ===========          ===========

                                         The accompanying  notes are an integral
                                                part of these statements.
</TABLE>


<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                                             Six months ended December 31,
                                                1995              1994
                                              ---------         --------
Cash flows from operating activities:

Net income............................        $116,808         $ 181,319

Adjustments to reconcile net income
  to net cash provided by operating
  activities:
Proceeds from sale of precious metals.         447,602           359,077
Depreciation, depletion & amortization          32,479            44,018
Loss on sale of precious metals.......          46,316            20,926
Receipt of precious metals............        (246,589)         (522,575)

Decrease in accounts receivable.......           2,519            22,143

Increase in prepaid expenses..........          (4,003)           (5,833)
Increase (Decrease) in accounts
  payable and accrued expenses........         169,981           (20,347)
Abandonment of mining properties......             -0-            10,835

Increase in payable to related parties             -0-             5,066
                                              ---------         --------

Net cash provided by operating
  activities..........................         565,113            94,629
                                              ---------         --------




                             (Statement Continues)




<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                                   (Continued)

                                             Six months ended December 31,
                                                1995              1994
                                             ---------         ---------

Cash flows from investing activities:
Additions to undeveloped mining
  properties.........................          (7,354)               -0-
Purchase of oil & gas properties.....        (190,437)            (1,172)
Investment in foreign subsidiaries
  "Aspen Recursos de Mexico".........            (649)           (21,882)
Additions to office equipment and
  vehicles...........................          (1,434)              (114)

Additions to cash surrender value....         (28,167)           (25,870)
                                            ---------           --------

Net cash used in investing activities        (228,041)           (49,038)
                                             ---------           --------


Net (decrease) increase in cash......         337,072             45,591
                                             ---------          --------

Cash and cash equivalents,
  at beginning of period.............         116,891             46,042

Cash and cash equivalents,
  at end of period...................       $ 453,963           $ 91,633
                                            =========           ========
Non cash transactions................       $ 166,700           $    -0-
                                            =========           ========





                     The accompanying notes are an integral
                            part of these statements.


<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                                December 31, 1995

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
six months ended December 31, 1995 are not necessarily indicative of the results
that may be expected for the fiscal year ending June 30, 1996.  These statements
should be read in conjunction  with the  consolidated  financial  statements and
notes thereto  included in Form 10-K-SB for the fiscal year ended June 30, 1995,
which is available without cost from Aspen Exploration Corporation upon request.


Note 2 - Net Income (Loss) per Common Share

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


Note 3 - Income Taxes

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 109,
"Accounting  for  Income  Taxes",  as of July 1,  1993.  There  was no  material
cumulative  effect of this change in  accounting  for income taxes as of July 1,
1993.  At  December  31,  1995  the  Company  had  Net  Operating  Loss  ("NOL")
carry-forward  for tax  purposes of  approximately  $4,618,444  (expiring in the
years 1996 to 2008). In addition,  the Company had tax credit  carry-forward  of
approximately $36,000 (expiring in the years 1996 to 2001).

Deferred tax assets (liabilities) at December 31, 1995 are as follows:

Gross Deferred Tax Assets:

  Net operating loss carry-forward..                 $1,570,270
  Valuation allowance for deferred
     tax assets.....................                 (1,559,382)
                                                     ----------
     Net Deferred Tax Asset                              10,888
                                                     ----------



<PAGE>



Note 3 - Income Taxes  (Continued)

Gross Deferred Tax Liabilities:

  Depreciation and other property,
    plant and equipment basis
    differences.....................                   (10,888)
                                                      ---------
Net Deferred Tax Asset (Liabilities)                  $     -0-
                                                      =========

Deferred  income  taxes are recorded to reflect the tax  consequences  on future
years of differences  between the tax basis of assets and  liabilities and their
financial  reporting  amounts at each year end.  Deferred  income tax assets are
recorded  to  reflect  the tax  consequences  on  future  years  of  income  tax
carry-forward  benefits,  reduced by benefit amounts not expected to be realized
by the Company.

The components of income tax expenses for the six months ended December 31, 1995
are as follows:

         Current                            $ 26,275

         Benefits of income
              tax carry-forward              (26,275)

         Deferred                                 -0-
                                            ---------

         Income tax expense                 $     -0-
                                            ---------

The  effective  income  tax rate  applicable  to the  current  provision  before
applying the tax carry-forward benefit was 24%.


Note 4 - Organization Costs

During the first  quarter,  ended  September  30,  1994,  the  Company  formed a
subsidiary  (Aspen  Recursos de Mexico,  S.A. de C.V.) which is  qualified to do
business  in Mexico,  so that the Company  can pursue  management's  decision to
investigate  and acquire  interests in mineral  prospects in Mexico.  During the
quarter ended  September 30, 1995,  the Company  began  amortizing  its costs to
organize its subsidiary  and will continue to do so over the next 60 months.  As
of December  31,  1995,  the  subsidiary  was  pursuing but had not acquired any
properties in Mexico.


Note 5 - Oil and Gas Properties

The  North  Strand  #1 well  located  in Kern  County,  California  was  spudded
(drilling  commenced) on August 15, 1995. The total depth of 10,000' was reached
on August 24, 1995.  The mud log recorded oil and gas shows while  drilling from
two  intervals  located at depths below the surface of  approximately  9175' and
9700'. A full suite of electric logs was obtained from 1,100' to 10,000'.
<PAGE>

Note 5 - Oil and Gas Properties (Continued)


Sidewall  core samples were also taken across the  potential  zones of interest.
After careful analysis of the mud logs, electric logs, and sidewall cores by the
Company, an independent  geologist,  an independent log analyst,  and a sidewall
core specialist,  the decision was made to install and cement  production casing
and attempt to complete the well as an oil and gas producer.

Completion  operations  commenced on the North  Strand #1 well on September  24,
1995. The lower Stevens  interval was perforated from 9706' to 9715'.  This zone
was swab tested for 10 hours and  recovered  109 barrels of fluid (31 barrels of
high  quality oil and 78 barrels of water).  This  equates to a daily rate of 75
barrels of oil per day (BOPD) and 187 barrels of water per day (BWPD). This zone
was then isolated and the upper Stevens  interval was  perforated  from 9148' to
9150'  and 9160' to 9166'.  The swab  test on this zone  yielded  very high flow
rates of  approximately  500  barrels  of  fluid  per day  (BFPD),  the oil cuts
averaged  12.5%.  The well flowed for brief  periods from this zone.  Both zones
were then tested  together at flow rates of 350 BFPD and an oil cut of 8.5%. The
completion rig was released on October 6, 1995.

The Company elected to pump test this well to further  evaluate its potential as
an economic  producing oil well. The well was pump tested from the lower Stevens
interval (9706' to 9715') only since this zone had a more favorable oil cut than
the upper zone.  During 31 days of  production  which  commenced on December 23,
1995 and  ended on  January  26,  1996  (with 4 days of down  time due to a pump
change),  the well produced 303 barrels of oil and 5,945 barrels of water.  This
is an average of 10 BOPD and 192 BWPD (5% oil cut) which is an uneconomic rate.

The well is currently shut-in as the new geological and geophysical  information
is being  evaluated to determine if a second well should be drilled on the North
Strand 700+ acre leasehold.

The  Company has a 10% working  interest  in the well and an  estimated  capital
investment at December 31, 1995 of approximately $95,000.

The Grey Wolf #1 well located in Kern County,  California was spudded  (drilling
commenced) on October 10, 1995.  The total depth of 4200' was reached on October
20, 1995.  The mud log recorded  gas shows while  drilling  from 3698' to 3708',
3715' to 3717',  3970' to 3973',  and 4096' to 4098'.  A full suite of  electric
logs was run from  450' to 4200'.  After  careful  analysis  of the mud logs and
electric  logs,  production  casing  was  cemented  in the hole and the well was
perforated from 3698' to 3708' and 3714' to 3717'.



<PAGE>



Note 5 - Oil and Gas Properties (Continued)

The well was flow  tested on a 1/4"  positive  choke  for a 10 day  period in an
effort to determine if the stabilized  production rate was sufficient to justify
the expense of surface and pipeline  facilities.  At the end of the flow period,
the well was producing  approximately  300 MCFPD of high quality (1054 BTU) gas.
The well was  then  shut in for a  pressure  build up to  determine  if the post
production  shut-in  pressure  would return to the initial  shut-in  pressure of
1400#. The current pressure in the well is 1115# and still slowly increasing.

The  Company  has an 18%  working  interest  in the well and an  actual  capital
investment at December 31, 1995 of approximately $108,000. The Company may spend
an additional  $10,000  depending on whether the well is completed as a producer
or plugged and abandoned.

The  Company  entered  into a  purchase  and sale  agreement  with  Capitol  Oil
Corporation,  an unaffiliated third party, to purchase all of Capitol's interest
in certain producing  properties for cash. This agreement was signed on November
9, 1995,  effective November 1, 1995. Closing of the purchase and sale agreement
was on January 10, 1996. The acquired  production  consists of two producing oil
wells, one gas well, waiting on pipeline connection,  and two shut-in wells that
will be plugged and  abandoned or converted to salt water  disposal  wells.  The
acquisition  is  located  in Kern  County,  California.  The  Company  has  been
designated operator of the properties.

The total purchase price of the acquired  properties was $925,000,  of which the
Company has 20% of the working interest acquired, for $185,000.

Based on an engineering  estimate prepared by the Company's  in-house staff, net
oil reserves acquired by the Company were calculated to be approximately  18,800
barrels of proved producing  reserves and 37,800 BOE (barrels oil equivalent) of
proved  behind pipe  reserves.  All behind pipe zones are  scheduled to commence
production  after  depletion  of the  current  producing  zone in each well.  In
addition to the proved producing and proved behind pipe zones, there also exists
approximately 680 acres which contain several high quality drilling locations.

Capitol  held these  producing  properties  and the  equipment  thereon  for the
exploration and production of oil and gas for the revenues derived thereof.  The
Company intends to hold these properties and use them for the same purpose.


Note 6 - Mining Properties

During  January,  1995,  the  Company  received  notice from the State of Alaska
Department of Revenue for unpaid  License Tax on Royalties from Mines and Mining
("License Taxes") for the years 1991 through 1993.  Pending the outcome of the 
Company's  petition  seeking relief from these taxes, the Company recorded, as 
of June 30, 1995, a liability of $45,000,  which approximates  the amount of 
taxes due under the second phase of the Valdez Creek operations.


<PAGE>



Note 6 - Mining Properties (Continued)


On October 30, 1995 the Alaska  Department of Revenue  notified the Company that
the  Department  of  Natural  Resources  had  issued   Certificates  of  Initial
Production to the  Department  of Revenue.  The  Department  of Revenue  further
stated that no taxes were due for the period 1991  through  September  30, 1995.
Accordingly,  the $45,000  liability  has been reversed and shown as income from
mining tax exemptions in the current period.


Note 7 - Disclosure of Certain Significant Risks and Uncertainties

Nature of Operations

Aspen Exploration Corporation (hereinafter "the Company") was incorporated under
the laws of the State of Delaware on February  28, 1980 for the primary  purpose
of acquiring, exploring and developing oil and gas and other mineral properties.

The consolidated  financial  statements include the Company and its wholly-owned
subsidiaries,   Aspen  Gold  Mining   Company,   formerly  Aspen  Gold  Refining
Corporation,  and Aspen  Recursos  de  Mexico.  Aspen  Gold  Mining  Company  is
currently  inactive  and  Aspen  Recursos  de  Mexico  operations  to date  have
consisted of its organization  and geological  investigation of certain areas in
Mexico.

During fiscal 1995, the Company continued its operation of various producing oil
and gas properties.  During fiscal 1995, the Company formed a subsidiary  (Aspen
Recursos de Mexico,  S.A. de C.V.), which is qualified to do business in Mexico,
so that the Company may pursue management's  recommendation of investigating and
acquiring  interests  in mineral  prospects in Mexico and Central  America.  The
Company also continued efforts initiated in earlier years to pursue its interest
in mineral projects in Russia.

The  Company  owns  leasehold  or royalty  interests  in  producing  oil and gas
properties in California,  Colorado,  Michigan, Montana, North Dakota, Oklahoma,
Texas and Wyoming,  and leasehold and royalty  interests in mining properties in
Alaska.

The Company  engages in a broad range of activities  associated with the oil and
gas business in an effort to develop oil and gas reserves. The Company's primary
areas of interest are in the states of California,  Montana, North Dakota, Texas
and Wyoming.

During the last few fiscal  years,  the  Company's  major  emphasis  has been on
production from its oil and gas properties. During the six-months ended December
31, 1995, the Company  participated  in the drilling of one oil well and one gas
well, as well as the  acquisition  of two producing  properties,  all located in
Kern County, California. During fiscal 1995, the Company sold a major portion of
its production in Montana, North Dakota and Texas.


<PAGE>



Note 7 - Disclosure of Certain Significant Risks and Uncertainties
         (Continued)


In the minerals  portion of the Company's  business,  the Company  continued its
ongoing search for possible  acquisition and  exploration of undeveloped  mining
properties in Alaska,  seeking  precious  metals,  primarily gold, but no Alaska
properties  were  acquired  during the current,  or the  previous,  fiscal year.
Continuing efforts are made to interest other companies in developing properties
with the Company.

Use of Estimates

Reserve  calculations by independent  petroleum engineers involve the estimation
of future net  recoverable  reserves of oil and gas and the timing and amount of
future net  revenues  to be received  therefrom.  Those  estimates  are based on
numerous factors,  many of which are variable and uncertain.  Reserve estimators
are  required  to make  numerous  judgments  based upon  professional  training,
experience  and  educational  background.  The  extent and  significance  of the
judgments in themselves are sufficient to render  reserve  estimates  inherently
imprecise.  Since reserve  determinations  involve  estimates of future  events,
actual  production,  revenues and operating expenses may not occur as estimated.
Accordingly,  it is common for the actual production and revenues later received
to vary  from  earlier  estimates.  Estimates  made in the  first  few  years of
production  from a property  are  generally  not as reliable as later  estimates
based on a longer production  history.  Reserve estimates based upon volummetric
analysis are  inherently  less reliable  than those based on lengthy  production
history.  Also,  potentially  productive  gas  wells  may not  generate  revenue
immediately due to lack of pipeline connections and potential  development wells
may have to be  abandoned  due to  unsuccessful  completion  techniques.  Hence,
reserve estimates may vary from year to year.

Concentration of Customers

In the oil and gas segment of the Company's business,  two purchasers in the six
months ended  December 31, 1995 and two  purchasers  in fiscal 1995  represented
sales  in  excess  of 10% of the  Company's  total  oil  and gas  revenues.  The
availability  of oil and  gas  purchasers  is  such,  however,  that  any  buyer
discontinuing  purchases from the Company could almost  assuredly be replaced by
another  buyer.  In the  mineral  segment  of the  Company's  business,  in-kind
royalties  paid by Cambior USA  (operator of the Valdez Creek mining  property),
represented  100% of the Company's  total  mineral  revenues for the fiscal year
ended June 30, 1995 and the six months ended December 31, 1995. The  termination
by Valdez Creek  Mining  Company of its mining  operations  will have a material
adverse effect on the Company's  business.  Cambior,  the operator of the Valdez
Creek mining  property,  notified the Company that it ceased  mining  operations
effective June 30, 1995. Gold processing,  however, continued through September,
1995.  The surface  area of the mine will be  restored by the fall of 1996,  and
Cambior will reassign all its interest in the mining claims to the Company.  The
Company is currently  evaluating the possibility of continued mining  operations
on the property, but has made no decision to do so.

<PAGE>

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

Liquidity and Capital Resources

As  reflected  on the  balance  sheet  and  statement  of cash  flows,  cash and
equivalents  increased by $337,072 from $116,891 at June 30, 1995 to $453,963 at
December 31, 1995. The increase in cash and cash  equivalents  for the six-month
period  ended  December  31,  1995 was  caused  by:  (1) the  sale of gold  from
inventory in late  December,  prior to its actual need by Registrant and (2) the
receipt of funds from third party investors for the acquisition of producing oil
and gas properties in Kern County, California. Cash and equivalents increased by
$45,591 from $46,042 to $91,633 for the same period a year earlier. The net cash
provided by  operations  for the  six-month  period ended  December 31, 1995 was
$565,113 and the net cash provided by operations for the six-month  period ended
December 31, 1994 was $94,629.  Had Registrant received cash rather than in-kind
gold royalties, cash flow from operating activities would have been $811,702 for
the  six-month  period  ended  December 31, 1995 as compared to $617,204 for the
six-month  period ended  December 31, 1994,  or an increase of 31.5% for the six
months ended December 31, 1995.

While it is true that cash and cash  equivalents  increased as stated,  "working
capital"  decreased  during the six-month  period by about  $240,000  (more than
33%).  The two principal  reasons for the increase in cash and cash  equivalents
were  the sale of gold  and the  significant  ($335,000)  increase  in  accounts
payable -- only  about  2/3rds of which is due to the cash  received  from third
party investors.  Accounts payable during the period increased by about $130,000
(more than doubling the June 30, 1995 number).

Precious  metals  inventory  decreased by  approximately  $235,000,  and this is
indicative of the sale of gold to finance  operations.  In the past,  Registrant
could  anticipate  further  production  from Valdez Creek  operations to restore
inventory.  That production has been terminated and Registrant cannot anticipate
any further production under the terms of the existing agreement.



<PAGE>



Net cash used by investing  activities  for the six-month  period ended December
31, 1995  totaled  $228,041,  primarily  from the  drilling of two wells and the
acquisition of five wells in Kern County, California.  Working capital decreased
$245,454  from  $690,180 at June 30, 1995 to $444,726 at December  31,  1995,  a
35.6%  decrease.  This  decrease in working  capital at December 31, 1995 is due
primarily to an increase in accounts  payable  from the Kern County  acquisition
and a decrease in Registrant's  gold inventory due to sales to meet Registrant's
current  operating  commitments.  Current  liabilities  increased  $336,681 from
$180,747 at June 30, 1995 to $517,428 at December  31,  1995,  a 186%  increase.
This  increase was due to the receipt of $267,269 in advances  from joint owners
and the  recording  of a payable of $166,700 for the  Registrant's  share of the
Kern County acquisition.  The reduction of severance taxes and other payables by
$97,000 partially offset these amounts.  Included in working capital at December
31,  1995,  is $471,059 of precious  metals,  primarily  gold.  As  Registrant's
precious  metals are  carried at the lower of cost or  market,  fluctuations  in
market  prices  for  precious   metals  will  affect  the  carrying   amount  of
Registrant's precious metals and, accordingly,  Registrant's working capital. At
December 31, 1995, the market value of precious metals in inventory was $477,654
which exceeded the total book value  reflected on the balance sheet  ($471,059).
Therefore,  no writedown  of the gold  inventory  was  necessary at December 31,
1995.

Although Registrant achieved a positive cash flow from operations,  that was due
primarily to the sales of gold and the increase in accounts payable as reflected
on the statement of cash flows.  Registrant recognized a negative cash flow from
investing  activities,  primarily  as a result  of its  purchase  of oil and gas
properties.  Sales of gold are  expected  to  continue  to  provide  a source of
capital to Registrant through the end of the current fiscal year, but Registrant
will have to  develop  other  sources  of  revenues  and  financing  to  finance
operations in the future.

During  the  three-month   period  ended  September  30,  1995,  Cambior  Alaska
("Cambior")  continued  mining  operations on properties  where  Registrant owns
various mineral royalty  interests.  During the three-month  period,  Registrant
received  approximately  748 troy  ounces  of raw gold from  Cambior,  valued at
$246,589.  As Registrant's Valdez properties are carried at zero-dollar value on
the balance  sheet,  Registrant  has no direct  costs  associated  with  in-kind
royalties.  Registrant  has been  advised by Cambior  that  in-kind gold royalty
payments to  Registrant  terminated  September  30,  1995 at which time  Cambior
ceased  operations  on  the  Valdez  Creek  properties,  except  for  continuing
reclamation  requirements.  Upon completion of mining restoration,  Cambior will
reassign  the  Valdez  Creek  mining   claims  to   Registrant.   Registrant  is
investigating  the geology of both lode and placer gold deposits at Valdez Creek
and studies of remaining gold resources are being undertaken.



<PAGE>



Registrant anticipates that production from its oil and gas properties and sales
of its in-kind gold royalties  currently held in inventory will provide adequate
liquidity for the near term future.  However,  should Registrant fail to replace
the oil and gas reserves sold during fiscal 1995 and gold production that ceased
in September,  1995,  Registrant would likely experience  difficulty meeting its
financial commitments beyond the fiscal period ending June 30, 1997.

Results of Operations

Registrant's  operations  for the  six-month  period  ended  December  31,  1995
continued to be focused on the production of oil and gas, and the  investigation
for possible  acquisition  of properties  prospective  for precious  metals.  In
addition,  Registrant  continued  to  receive  in-kind  gold  royalties  through
September 30, 1995 from its Valdez  Creek,  Alaska  properties,  and drilled two
wildcat  wells in Kern County,  California.  Registrant  also  acquired  working
interests in two  producing oil and gas  properties  in Kern County,  California
effective November 1, 1995.

Precious metals income were $-0- and $246,589 for the three and six months ended
December 31, 1995 compared to $277,250 and $522,575 for the three- and six-month
periods a year earlier.  This decline in precious  metals  revenue is due to the
cessation of  operations  at the Valdez Creek Mine and  Registrant's  receipt of
in-kind gold shipments ceased, effective September 30, 1995.

The three-month result of operations, a loss of approximately $98,000,  compared
to net income of $117,000 for the six-month period is indicative of the negative
impact the closing of the Valdez Creek Mine has had on Registrant. These results
will likely  continue for the near term unless  Registrant  can replace its lost
gold production.

Oil and gas revenues increased $11,405 for the three-month period ended December
31, 1995 from  $84,523 at December  31, 1994 to $95,928 at December  31, 1995, a
13.5% increase. For the six months ended December 31, 1995, oil and gas revenues
increased $13,044 from $182,233 at December 31, 1994 to $195,277 at December 31,
1995, a 7.2% increase.  This increase was due to an increase in promotional fees
and  administrative  overhead  fees of $41,100 and $23,267 for the three  months
ended  December  31,  1995  and  $93,600  in  promotional  fees and  $49,036  in
administrative  overhead fees for the six-month  period ended  December 31, 1995
charged to  participants  to acquire and drill the North  Strand #1 and the Grey
Wolf #1 wells in Kern County,  California.  This  increase  was almost  entirely
offset by a reduction in oil and gas revenue and administrative fees received by
Registrant  on producing  properties  sold in the fourth  quarter of fiscal year
ended June 30, 1995.

Oil and gas  production  costs  decreased by $44,364 and $125,486 to $13,839 and
$20,885 for the three- and six-month  periods ended December 31, 1995. This is a
decrease of 76.2% and 85.7%,  respectively.  Substantially  all of this decrease
was the result of Registrant's  sale of high cost, poorly performing oil and gas
producing properties during the fourth quarter of fiscal 1995.

<PAGE>

Depreciation,  depletion and amortization expense of $24,979 and $32,479 for the
three- and six-month  periods ended  December 31, 1995  represent an increase of
$3,679 and a decrease of $11,521 for the three- and  six-months  ended  December
31, 1995. The increase in depletion for the three months ended December 31, 1995
represents  an increase  in the asset base from the  acquisition  of  properties
effective November 1, 1995 in Kern County,  California.  The decline for the six
months ended December 31, 1995 was due to the sale of underperforming properties
in fiscal 1995.

During  January,  1995,  Registrant  received  notice  from the  State of Alaska
Department of Revenue for unpaid  License Tax on Royalties from Mines and Mining
for the years 1991 through 1993.  Registrant  contested  these License Taxes and
believed it to be exempt from these taxes.  Pending the outcome of  Registrant's
petition  seeking  relief from these taxes,  Registrant  recorded a liability of
$45,000 at June 30, 1995 for the  estimated  amount of the taxes due. On October
30,  1995 the Alaska  Department  of  Revenue  notified  Registrant  that it had
accepted  its petition  for relief and no taxes were due through  September  30,
1995.  Accordingly,  Registrant  reversed its recorded liability to the State of
Alaska and  recorded  revenue in the  amount of  $45,000  for the Alaska  Mining
License Tax exemption.

Selling,  general and  administrative  expenses decreased by $22,810 and $36,974
(or 16.2% and 11.8%) for the three- and  six-month  period  ended  December  31,
1995.  This decrease for the three- and six-month  period was due primarily to a
decrease in  consulting  fees of  approximately  $45,000 and travel  expenses of
$16,000 associated with a consulting geologist retained by Registrant to explore
for mining  prospects in the western  United States and Mexico.  The services of
this geologist were  discontinued in January,  1995. During the six months ended
December 31, 1994, Registrant wrote off costs associated with the abandonment of
the Sand Springs  project in Nevada in the amount of $26,700 and  increased  its
reserve for bad debts by $17,000.  These decreases were offset by costs incurred
to establish an oil and gas exploration office in Bakersfield, California during
the fourth  quarter  of 1995.  Salaries,  vehicle  expense,  medical  and office
expense for the California office were approximately  $68,000 for the six months
ended December 31, 1995.





<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,
February 12, 1996                                   Chief Executive Officer,
                                                    Principal Financial Officer