FORM 10-Q-SB

                       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 December 31, 1999

                                       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 Aspen 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 Aspen (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 Aspen 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 January 31, 2000
-----------------                                -------------------------------
  Common stock,
  $.005 par value                                          5,191,322


                                        1

<PAGE>



Part One.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS

                                                   December 31,      June 30,
                                                       1999           1999
                                                   ------------     ----------
                                                   (Unaudited)      (Audited)
Current Assets:
  Cash and cash equivalents, including .......     $ 1,122,348      $   335,603
   $377,039 and $296,294 of invested
   cash at December 31, 1999 and June
  30, 1999 respectively
  Precious metals ............................          18,823           18,823
  Accounts receivable, trade .................         230,303          108,913
  Prepaid expenses ...........................           4,571            9,770
                                                   -----------      -----------
     Total current assets ....................       1,376,045          473,109
                                                   -----------      -----------
Investment in oil and gas properties,
  at cost (full cost method of
  accounting) ................................       2,631,421        2,309,566
  Less accumulated depletion and
    valuation allowance ......................      (1,423,305)      (1,280,305)
                                                   -----------      -----------
                                                     1,208,116        1,029,261
                                                   -----------      -----------
Property and equipment, at cost:
  Furniture, fixtures and vehicles ...........         182,103          178,403
  Less accumulated depreciation ..............        (144,087)        (136,237)
                                                   -----------      -----------
                                                        38,016           42,166
                                                   -----------      -----------
Cash surrender value, life insurance .........         239,095          239,095
                                                   -----------      -----------

     TOTAL ASSETS ............................     $ 2,861,272      $ 1,783,631
                                                   ===========      ===========

                              (Statement Continues)
                 See notes to Consolidated Financial Statements

                                        2

<PAGE>


                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                  December 31,        June 30,
                                                     1999               1999
                                                  ------------      -----------
                                                  (Unaudited)        (Audited)
Current liabilities:
  Accounts payable and accrued
    expenses ...............................      $   892,272       $   280,920
  Advances from joint owners ...............          342,623            32,245

  Notes payable - current ..................          109,987           126,570
                                                  -----------       -----------
  Total current liabilities ................        1,344,882           439,735
                                                  -----------       -----------
  Notes payable - long term ................           68,750            81,003
                                                  -----------       -----------
Stockholders' equity:

  Common stock, $.005 par value:
    Authorized: 50,000,000 shares
    Issued: At December 31, 1999:
    5,191,322 and June 30, 1999:
    5,191,322 ..............................           25,956            25,956


  Capital in excess of par value ...........        5,951,602         5,951,602
  Accumulated deficit ......................       (4,501,918)       (4,686,665)
  Deferred compensation ....................          (28,000)          (28,000)
                                                  -----------       -----------

  Total stockholders' equity ...............        1,447,640         1,262,893
                                                  -----------       -----------
Total liabilities and stockholders'
  equity ...................................      $ 2,861,272       $ 1,783,631
                                                  ===========       ===========

                 See Notes to Consolidated Financial Statements

                                        3

<PAGE>
<TABLE>
<CAPTION>
                                    ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                                   (Unaudited)

                                                   Three Months Ended                           Six Months Ended
                                                      December 31,                                December 31,
                                             -------------------------------           -------------------------------
                                                 1999               1998                  1999                1998
                                                 ----               ----                  ----                ----
Revenues:
---------
<S>                                          <C>                  <C>                  <C>                  <C>
  Oil and gas ........................       $  314,464           $  332,541           $  587,738           $  627,803

  Management fees ....................           65,544               56,998               83,110               76,612
  Interest and other, net ............            7,368                8,066                9,453               14,955
                                             ----------           ----------           ----------           ----------
Total Revenues .......................          387,376              397,605              680,301              719,370
                                             ----------           ----------           ----------           ----------

Costs and expenses:
-------------------
  Oil & gas production ...............           27,280               18,920               42,134               30,182
  Depreciation, depletion
   and amortization ..................           90,925               28,000              150,850               56,000
  Aspen Power System
   expense ...........................           22,585                  -0-               43,794                  -0-
  Selling, general and
   administrative ....................          111,992              105,475              251,534              249,303
  Interest expense ...................            3,744               11,807                7,242               17,767
                                             ----------           ----------           ----------           ----------
Total Costs & Expenses ...............          256,526              164,202              495,554              353,252
                                             ----------           ----------           ----------           ----------
NET INCOME ...........................       $  130,850           $  233,403           $  184,747           $  366,118
                                             ==========           ==========           ==========           ==========
Basic earnings per common
  share ..............................       $      .03           $      .05           $      .04           $      .07
                                             ==========           ==========           ==========           ==========
Diluted earnings per
  common share .......................       $      .03           $      .05           $      .04           $      .07
                                             ==========           ==========           ==========           ==========

Basic weighted average
number of common shares
outstanding ..........................        5,191,322            4,916,322            5,191,322            4,916,322
                                             ==========           ==========           ==========           ==========
Diluted weighted average
number of common shares
outstanding ..........................        5,311,002            5,098,722            5,311,002            5,098,722
                                             ==========           ==========           ==========           ==========

                              The accompanying notes are an integral part of these statements.

                                                            4

<PAGE>

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


                                                                                Six months ended December 31,
                                                                                1999                     1998
                                                                            ----------               -----------

Cash flows from operating activities:
-------------------------------------

Net gain ............................................................       $   184,747              $   366,118

Adjustments to reconcile net income
  to net cash provided (used) by
  operating activities:

  Depreciation, depletion & amortization ............................           150,850                   56,000
  Loss on write off of investments ..................................              --                      3,400

Changes in assets and liabilities:

  Increase in accounts receivable ...................................          (121,390)                (332,125)
  Decrease in prepaid expense .......................................             5,199                    2,620
  Increase in accounts payable and accrued expense ..................           921,730                1,102,884
  Decrease in due to related parties ................................              --                    (44,792)
                                                                            -----------              -----------
  Net cash provided (used) by operating activities ..................         1,141,136                1,154,105
                                                                            -----------              -----------

Cash flows from investing activities:
-------------------------------------

  Conveyance of oil & gas properties for cash .......................              --                    477,950
  Development & acquisition of oil & gas properties .................          (321,855)                (403,556)
  Purchase of office equipment ......................................            (3,700)                  (3,428)
  Sale of mining data ...............................................              --                      1,970
                                                                            -----------              -----------


  Net cash (used in) provided by investing activities ...............          (325,555)                  72,936
                                                                            -----------              -----------

Cash flows from financing activities:
-------------------------------------

  Note payable - proceeds ...........................................              --                      2,571
  Repayment of notes payable ........................................           (28,836)                 (28,139)
                                                                            -----------              -----------

                                                                                (28,836)                 (25,568)

  Net increase in cash and cash equivalents .........................           786,745                1,201,473

  Cash and cash equivalents, beginning of year ......................           335,603                  425,306
                                                                            -----------              -----------

  Cash and cash equivalents, end of year ............................       $ 1,122,348              $ 1,626,779
                                                                            ===========              ===========

  Interest paid .....................................................       $     7,242              $    17,767
                                                                            ===========              ===========


Schedule of non cash investing and financing activities:
--------------------------------------------------------

  Notes payable issued for properties ...............................       $      --                $   206,250
  Common stock issued for properties ................................              --                    275,000
                                                                            -----------              -----------

                                                                            $      --                $   481,250
                                                                            ===========              ===========


                        The accompanying notes are an integral part of these statements.

                                                     5
</TABLE>

<PAGE>

                          ASPEN EXPLORATION CORPORATION

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                                December 31, 1999


Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Nature of Business
     ------------------

     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 uranium and other mineral
     properties. The Company's oil and gas properties are located in California.

     The Company has two wholly owned subsidiaries, Aspen Gold Mining Company
     and Aspen Recursos de Mexico, as well as 85% owned Aspen Power Systems
     Corporation ("APS") formed in February 1999. Aspen Gold Mining has staked 6
     claims on Valdez Creek in central Alaska. Other than those claims, none of
     the subsidiaries have any assets, liabilities or operations. The purpose of
     APS will be to attempt to design, construct and possibly operate gas
     turbine power plants to generate electrical energy.

     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.

     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. Actual
     results could differ from those estimates.


                                        6

<PAGE>



Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


     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 and estimated reserves. Price declines reduce the estimated quantity
     of proved reserves and increase annual amortization expense (which is based
     on proved reserves).

     Impairment of Long-lived Assets
     -------------------------------

     The Company evaluates the carrying value of assets other than oil and gas
     assets for potential impairment on an ongoing basis. The Company evaluates
     the carrying value of long-lived assets and long-lived assets to be
     disposed of for potential impairment periodically. The Company considers
     projected future operating results, cash flows, trends and other
     circumstances in making such estimates and evaluations.

     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.

     New Accounting Pronouncements
     -----------------------------

     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 and diluted
     earnings per share. 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. The Company adopted SFAS No. 128 in
     fiscal year 1998.

                                        7

<PAGE>



Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     The following is a reconciliation of the numerators and denominators used
     in the calculations of basic and diluted earnings (loss) per share for the
     six months ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>

                                         December 31,                    December 31,
                                           1999                              1998
                                                      Per                                 Per
                                  Net                 Share       Net                    Share
                                Income     Shares     Amount     Income     Shares      Amount
                                ------     ------     ------     ------     ------      ------

Basic earnings per share:

  Net income and
<S>                             <C>       <C>          <C>      <C>        <C>           <C>
  share amounts                 184,747   5,191,322    .04      366,118    4,916,322     .07

  Dilutive securities
  stock options                             560,000                          460,000

  Repurchased shares                       (440,320)                        (277,600)
                                -------------------------------------------------------------

Diluted earnings per share:

  Net income and assumed
  share conversion              184,747   5,311,002    .04       366,118   5,098,722     .07
                                =======   =========   ====     =========   =========   =====
</TABLE>



     Precious metals and revenues
     ----------------------------

     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 December 31, 1999.

     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 receipt of prospect fees or 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 the
     units-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

                                        8

<PAGE>



Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     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 $281,719 at December 31, 1999 and December 31, 1998.

     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.

     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 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.
     Gains or losses on the sale or abandonment of mining properties are charged
     to current operations.

     Deferred compensation Costs
     ---------------------------

     The Company records stock bonuses to employees as an expense and an
     increase to paid-in capital in the year of grant unless the bonus vests
     over future years. Bonuses that vest are deferred and expensed ratably over
     the vesting period.

                                        9

<PAGE>



Note 2 SEGMENT INFORMATION

     The Company operates in three industry segments within the United States:
     (1) oil and gas exploration and development, (2) mineral exploration and
     development and (3) electrical generation construction.

     Identified assets by industry are those assets that are used in the
     Company's operations in each industry. Corporate assets are principally
     cash, cash surrender value of life insurance, furniture, fixtures and
     vehicles.

     During the fourth quarter of 1998, the Company adopted Statement of
     Financial Accounting Standards No. 131, "Disclosures about Segments of an
     Enterprise and Related Information" (SFAS 131). The adoption of SFAS 131
     requires the presentation of descriptive information about reportable
     segments which is consistent with that made available to the management of
     the Company to assess performance.

     The oil and gas segment derives its revenues from the sale of oil and gas
     and prospect generation and administrative overhead fees charged to
     participants in its oil and gas ventures. The mining segment receives its
     revenues primarily from the sale of minerals and precious metals and from
     time to time from the sale of a mineral venture that it has originated.
     Electrical generation construction will receive its revenues from the sale,
     design, construction and/or operation of gas turbine or other electrical
     generation projects. As of December 31, 1999 the Company was in the
     planning stage of this segment and no revenues have been received.
     Corporate income is primarily derived from interest income on funds held in
     money market accounts.

     During the six months ended December 31, 1999 there were no intersegment
     revenues. The accounting policies applied by each segment are the same as
     those used by the Company in general.

     Net sales to one customer of the oil and gas segment totalled approximately
     $433,000 of revenues or 76% for the six months ended December 31, 1999.

     There have been no differences from the last annual report in the basis of
     measuring segment profit or loss. There have been no material changes in
     the amount of assets for any operating segment since the last annual report
     except for the oil and gas segment which capitalized approximately $322,000
     for the development and acquisition of oil and gas property.

                                       10

<PAGE>



Note 2 SEGMENT INFORMATION (CONTINUED)

     Segment information consists of the following for the six months ended
     December 31, 1999:

<TABLE>
<CAPTION>

                                    Oil and Gas      Mining        Power Plant    Corporate     Consolidated
                                    -----------      ------        -----------    ---------     ------------
         Revenues:
      <S>                              <C>             <C>            <C>             <C>            <C>
           1999                     $   670,848     $  -0-           $  -0-       $   9,453       $   680,301
           1998                         704,415        -0-              -0-          14,955           719,370

         Income (loss) from
          operations:

           1999                     $   477,864     $  -0-           $(43,794)    $ (249,323)     $   184,747
           1998                         618,233        -0-              -0-         (252,115)         366,118

         Identifiable assets:

           1999                     $ 1,438,419     $ 18,823         $  -0-       $1,404,030      $ 2,861,272
           1998                       1,479,744       44,679            -0-        1,912,241        3,436,664

         Depreciation, depletion
         and valuation charged to
         identifiable assets:

           1999                     $(1,423,305)    $   -0-          $  -0-       $ (144,087)     $(1,567,392)
           1998                      (1,056,902)        -0-             -0-         (126,544)      (1,183,446)

         Capital expenditures:

           1999                     $   321,855     $   -0-          $  -0-       $    3,700      $   325,555
           1998                         403,556         -0-             -0-            3,428          406,984
</TABLE>


Note 3 MINING PROPERTIES

     KAYCEE AND SHAMROCK URANIUM PROSPECTS
     -------------------------------------

     In fiscal 1997, the Company began exploration for in situ uranium deposits
     in Wyoming. During the six months ended December 31, 1999 and 1998, the
     Company expended $-0- and $4,472, respectively, on the Kaycee and Shamrock
     prospects. In addition, during 1998 the Company issued to the President
     100,000 shares of the Company's common stock, valued at $14,000, in
     exchange for the President's 25% interest in geological data and potential
     uranium prospects.

     During fiscal 1998, the Company sold the geological data of the Kaycee and
     Shamrock prospects to a privately-held Canadian company and, in exchange,
     received a $125,000 cash payment and a commitment to receive an additional
     $125,000 prior to December 31, 1998. As of January 31, 2000, the Company
     has not received the second payment of $125,000 and the privately-held
     Canadian company is in default. Discussions are underway to attempt to
     resolve this issue. Under the terms of the sales agreement reached in
     March, 1998, the Company also received 2 million shares or approximately
     25% of the common stock of the privately-held company. To the knowledge of
     the Company, at the

                                       11

<PAGE>



Note 3 MINING PROPERTIES (CONTINUED)

     time of this filing, the stock had no market value. All capitalized mining
     costs have been written off as of June 30, 1999.


Note 4 NOTES PAYABLE

     The Company owes the following debt:

                                                      December 31,    June 30,
                                                         1999          1999
                                                      --------------------------
         Note payable to related party,
         monthly principal and interest
         payments of $4,269, due September, 2000,
         collateralized by working interests in
         the Emigh lease                               $   36,682    $   59,487

         Note payable to auto dealership, monthly
         principal and interest payments of $879,
         due July, 2000, collateralized by new
         vehicle                                            4,305        10,336

         Note payable to an unaffiliated third
         party for the acquisition of producing
         gas properties in Tehama and Glenn Counties,
         California, interest at 5.475% and
         collateralized by working interests in the
         Johnsonand Gay Gas Units                         137,750       137,750
                                                       ----------    ----------

                                                         178,737        207,573

         Less current portion                            109,987        126,570
                                                      ----------     ----------

                                                      $   68,750     $   81,003
                                                      ==========     ==========


                                       12

<PAGE>



Note 5 COMMITMENTS AND CONTINGENCIES

     The Company drilled and completed the Cigar 20-1 located in the Winters gas
     field, Solano County, California. The Company's net share of the drilling
     and completion costs was approximately $48,200 ($87,000 minus $38,800 in
     income for overhead and prospect development fees). The Company owns a
     15.0538% working interest before payout and a 21.25378% after payout in the
     well.

     The Company drilled and completed its Emigh 3-1 well located in the
     Denverton Creek gas field. Gas sales commenced in January 2000 at a rate of
     5,000 MCF per day of gas and have rapidly declined to approximately 400 MCF
     per day with 110 barrels of salt water per day. If this lower Peterson zone
     becomes uneconomic, it will be plugged and one of the other several
     potential gas zones higher in the wellbore, as indicated by electric logs,
     will be perforated. The Company's net share (23.80% working interest) of
     the drilling and completion costs was approximately $175,000 ($236,000
     minus $61,000 in income for geologic and overhead fees).

     The Company participated for a 5.565% working interest in one additional
     well, the Daughters of the Dragons 1, located in the Malton Black Butte
     Field, Tehama County, California, in December 1999. The Company's net share
     of the dry hole costs was approximately $12,000. One of the partners in the
     well did not participate in the completion attempt, so the Company
     increased its interest in the currently completed interval to 28.5% for an
     additional amount of approximately $35,000. Gas sales commenced at the rate
     of 500 MCF per day of gas in January 2000.


                                       13

<PAGE>



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


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

December 31, 1999 as compared to December 31, 1998
--------------------------------------------------

From June 30, 1999 to December 31, 1999 Aspen's working capital decreased from
$33,374 to $31,163, a 6.6% decrease. This decrease in working capital is
expected to improve somewhat in the third quarter when Aspen's share of current
drilling activity, which began in October of 1999, will be paid for.

During fiscal 1999, Aspen Exploration Corporation created Aspen Power Systems
Corporation ("APS"), an 85% owned subsidiary. Aspen has dedicated certain cash
resources to investigate the economic possibilities of the sale, design,
construction and/or operation of gas turbines to produce electricity. Aspen has
dedicated a total of approximately $130,000 of financing in order to provide
funding for APS to attempt to commence funding its own operations. Such
dedicated funding came from Aspen's operating funds derived from oil and gas
production. There is no assurance APS will be able to fund its own operations
after the dedicated funding by Aspen is fulfilled. Through December 31, 1999,
APS has expended $127,000 on this project, $43,794 of which was expended in the
six months ended December 31, 1999.

In March 1998, Aspen reached an agreement with a privately-held Canadian company
which provided for Aspen to receive certain cash payments from, and to be issued
2,000,000 shares of stock in, a privately-held Canadian company. Aspen conveyed
to the privately-held company all of Aspen's interest in two uranium projects in
Wyoming. The privately-held Canadian company is in default to Aspen in the
amount of $125,000 which was to be paid prior to December 31, 1998. Discussions
are underway to attempt to resolve this issue.

Aspen believes that it has sufficient funds on hand or that will be generated
from current operations to fund its activities for the next twelve months.


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


December 31, 1999 Compared to December 31, 1998
-----------------------------------------------

For the six months ended December 31, 1999 Aspen'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 in California.

Oil and gas revenues for the six months ended December 31, 1999 decreased
$40,065, from $627,803 to $587,738, a 6.4% decrease. This decrease reflects the
normal decline in production of mature oil and gas properties and will be offset
somewhat by new production that will come on line in the third quarter.

                                       14

<PAGE>


Oil and gas production expenses increased $11,952 from $30,182 to $42,134 for
the six month period ended December 31, 1999. This increase was due to increased
water production in existing oil wells and the cost of putting a previously
flowing oil well on a pumping unit as well as various other maintenance
projects.

Depletion, depreciation and amortization increased significantly, from $56,000
to $150,850, a 169% increase. This increase reflects the under estimate of
actual depletion expense for the first quarter of 1998 by approximately $80,000
and an increase in the value of the full cost pool on which the depletion rate
is calculated.

Selling, general and administrative expenses increased by $2,231 or 1% from
$249,303 to $251,534. Selling, general and administrative expenses remained
fairly constant when comparing the two periods with no significant change in any
category.

As a result of Aspen's operations for the six months ended December 31, 1999,
Aspen ended the period with net income of $184,747 compared to net income of
$366,118 a year earlier. This decrease of approximately $181,000 reflected a
decrease in total revenues of $39,000 due primarily to a decline in oil and gas
revenues received from mature producing properties. Aspen also incurred $43,800
in operating expenses associated with Aspen Power Systems Corporation. These
costs were primarily for prospect review, financial studies and travel costs.
Depletion expense increased by approximately $94,850 from December 31, 1998.
However, depletion was understated by approximately $80,000 for the first six
months of 1998.

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


                                    ASPEN EXPLORATION CORPORATION




                                    /s/ R. V. Bailey
                                    --------------------------------------------
                                    By:  R. V. Bailey,
January 31, 2000                    Chief Executive Officer,
                                    Principal Financial Officer

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