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 September 30, 2001
                                               ------------------

                                       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)                         Identification No.)

      Suite 208, 2050 S. Oneida St.,
           Denver, Colorado                                       80224-2426
 --------------------------------------                            --------
(Address of Principal Executive Offices)                          (Zip Code)

                    Issuer's telephone number: (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 [ 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 November 9, 2001
Common stock, $.005 par value                              5,812,205


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Part One.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                         ASPEN EXPLORATION CORPORATION AND SUBSIDIARY
                                  CONSOLIDATED BALANCE SHEETS

                                            ASSETS
                                                                 September 30,     June 30,
                                                                      2001          2001
                                                                      ----          ----
                                                                  (Unaudited)     (Audited)

Current Assets:
<S>                                                               <C>            <C>
Cash and cash equivalents, including $2,636,342 and
$2,046,201 of invested cash at September 30, 2001
and June 30, 2001 respectively ................................   $ 2,273,055    $ 2,695,583

Precious metals ...............................................        18,823         18,823

Accounts receivable, trade ....................................       572,030        554,159

Accounts receivable, related party (Note 7) ...................           -0-         20,000

Prepaid expenses ..............................................        51,124         14,898
                                                                  -----------    -----------
     Total current assets .....................................     2,915,032      3,303,463
                                                                  -----------    -----------
Investment in oil and gas properties, at cost (full cost
method of accounting) .........................................     4,648,879      4,297,306
Less accumulated depletion and valuation allowance ............    (2,023,713)    (1,921,413)
                                                                  -----------    -----------
                                                                    2,625,166      2,375,893
                                                                  -----------    -----------
Property and equipment, at cost:

Furniture, fixtures and vehicles ..............................       104,368        104,368

Less accumulated depreciation .................................       (31,100)       (28,133)
                                                                  -----------    -----------
                                                                       73,268         76,235
                                                                  -----------    -----------
Cash surrender value, life insurance ..........................       239,095        239,095
                                                                  -----------    -----------
     TOTAL ASSETS .............................................   $ 5,852,561    $ 5,994,686
                                                                  ===========    ===========


                                     (Statement Continues)
                        See notes to Consolidated Financial Statements

                                              2
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                  ASPEN EXPLORATION CORPORATION AND SUBSIDIARY
                     CONSOLIDATED BALANCE SHEETS (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                   September 30,      June 30,
                                                       2001            2001
                                                       ----            ----
                                                    (Unaudited)      (Audited)
Current liabilities:

Accounts payable and accrued expenses ..........    $   817,308     $ 1,036,715

Advances from joint owners .....................        518,203         444,232
                                                    -----------     -----------
Total current liabilities ......................      1,335,511       1,480,947

Deferred income taxes payable (Note 6) .........        179,200         179,200
                                                    -----------     -----------
Total liabilities ..............................      1,514,711       1,660,147
                                                    -----------     -----------
Stockholders' equity:

Common stock, $.005 par value:
    Authorized: 50,000,000 shares
    Issued: At September 30, 2001: 5,812,205
    and June 30, 2001: 5,812,205 ...............         29,061          29,060

Capital in excess of par value .................      6,015,279       6,015,279

Accumulated deficit ............................     (1,693,682)     (1,692,592)

Deferred compensation ..........................        (12,808)        (17,208)
                                                    -----------     -----------

Total stockholders' equity .....................      4,337,850       4,334,539
                                                    -----------     -----------
Total liabilities and stockholders' equity .....    $ 5,852,561     $ 5,994,686
                                                    ===========     ===========


                 See Notes to Consolidated Financial Statements

                                       3

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


                                                         Three Months Ended
                                                            September 30,
                                                            -------------
                                                             (unaudited)
                                                         2001           2000
                                                         ----           ----
Revenues:

  Oil and gas ....................................   $   256,160    $   561,694

  Management fees ................................        42,688         56,032

  Interest and other, net ........................        21,312         10,121
                                                     -----------    -----------
Total Revenues ...................................       320,160        627,847
                                                     -----------    -----------

Costs and expenses:

  Oil and gas production .........................        25,872         57,542

  Depreciation, depletion and amortization .......       105,266         64,000

  Aspen Power Systems expense ....................        20,000            -0-

  Selling, general and administrative ............       170,112        151,295

  Interest expense ...............................           -0-          6,940
                                                      -----------   -----------
Total Costs and Expenses .........................       321,250        279,777
                                                      -----------   -----------
Net income before taxes ..........................   $    (1,090)   $   348,070
                                                     -----------    -----------
Provision for income taxes .......................           -0-         19,400
                                                     -----------    -----------
Net income .......................................   $    (1,090)   $   328,670
                                                     ===========    ===========
Basic earnings per common share ..................   $       -0-    $       .06
                                                     ===========    ===========
Diluted earnings per common share ................   $       -0-    $       .06
                                                     ===========    ===========
Basic weighted average number of common shares
outstanding ......................................     5,812,205      5,345,938
                                                     ===========    ===========
Diluted weighted average number of common shares
outstanding ......................................     5,891,844      5,693,138
                                                     ===========    ===========


                     The accompanying notes are an integral
                            part of these statements.

                                       4

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



                                                              Three months ended September 30,
                                                                    2001          2000
                                                                    ------------------

Cash flows from operating activities:
-------------------------------------
<S>                                                            <C>            <C>
Net income (loss) .............................................$    (1,090)   $   328,670

Adjustments to reconcile net income
  to net cash provided by
  operating  activities:

  Depreciation, depletion & amortization ......................    105,266         64,000
  Amortization of deferred compensation .......................      4,400          4,400

Changes in assets and liabilities:

  (Increase) decrease in accounts receivable ..................      2,130       (186,655)
  (Increase) in prepaid expense ...............................    (36,226)        (8,171)
  Increase (decrease) in accounts payable and accrued
     expense ..................................................   (145,435)     1,734,714
                                                               -----------    -----------
  Net cash provided (used) by operating activities ............    (70,955)     1,936,958
                                                               -----------    -----------

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

  Additions to oil & gas properties ...........................   (351,573)      (129,107)
                                                               -----------    -----------


  Net cash used in investing activities .......................   (351,573)      (129,107)
                                                               -----------    -----------

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

  Repayment of notes payable ..................................         -0-       (12,566)
                                                               -----------    -----------

  Net cash used in financing activities .......................         -0-       (12,566)

  Net increase (decrease) in cash and cash equivalents ........   (422,528)     1,795,285

  Cash and cash equivalents, beginning of year ................  2,695,583        507,382
                                                               -----------    -----------
  Cash and cash equivalents, end of year ......................$ 2,273,055    $ 2,302,667
                                                               -----------    -----------
  Interest paid ...............................................$        -0-   $     6,940
                                                               ===========    ===========
  Income taxes paid ...........................................$        -0-   $     8,000
                                                               ===========    ===========


                               The accompanying notes are an integral
                                      part of these statements.

                                                 5
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                          ASPEN EXPLORATION CORPORATION

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                               September 30, 2001


Note 1        BASIS OF PRESENTATION

          The accompanying financial statements are unaudited. However, in our
          opinion, the accompanying financial statements reflect all
          adjustments, consisting of only normal recurring adjustments,
          necessary for fair presentation. Interim results of operations are not
          necessarily indicative of results for the full year. These financial
          statements should be read in conjunction with our Annual Report on
          Form 10-KSB for the year ended June 30, 2001.

          Except for the historical information contained in this Form 10-QSB,
          this Form contains forward-looking statements that involve risks and
          uncertainties. Our actual results could differ materially from those
          discussed in this Report. Factors that could cause or contribute to
          such differences include, but are not limited to, those discussed in
          this Report and any documents incorporated herein by reference, as
          well as the Annual Report on Form 10-KSB for the year ended June 30,
          2001.


Note 2        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. We adopted SFAS No. 128 in fiscal year
          1998.

                                       6

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Note 2        EARNINGS PER SHARE (CONTINUED)

          The following is a reconciliation of the numerators and denominators
          used in the calculations of basic and diluted earnings per share for
          the three months ended September 30, 2001 and 2000:

                                              September 30,                               September 30,
                                                  2001                                        2000
                                   Net                        Per                                           Per
                                   Income                     Share            Net                          Share
                                   (Loss)        Shares       Amount           Income        Shares         Amount
                                 ---------      ---------    ---------        ---------     ---------     ---------
Basic earnings per share:

  Net income (loss) and
<S>                                 <C>         <C>              <C>            <C>          <C>                <C>
  share amounts                     (1,090)     5,812,205         --            328,670      5,345,938          .06

  Dilutive securities
  stock options                                   180,000                                      680,000

  Repurchased shares                             (100,361)                                    (332,800)
                                 ----------------------------------------------------------------------------------
Diluted earnings per share:

  Net income and assumed
  share conversion                  (1,090)     5,891,844         --            328,670     5,693,138           .06
                                 =========      =========    =========        =========     =========     =========




Note 3        SEGMENT INFORMATION

          We operate in one industry segment within the United States, oil and
          gas exploration and development.

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

          During the fourth quarter of 1998, we 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.

          Our 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 our oil and gas ventures. Corporate income is
          primarily derived from interest income on funds held in money market
          accounts.

                                       7
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Note 3        SEGMENT INFORMATION (CONTINUED)

          During the three months ended September 30, 2001 there were no
          intersegment revenues. The accounting policies applied by each segment
          are the same as those used by us in general.

          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 $351,573 for the development and acquisition
          of oil and gas properties.

          Segment information consists of the following for the three months
          ended September 30:

                                     Oil and Gas      Power Plant      Corporate       Consolidated
                                     -----------      -----------      ---------       ------------
          Revenues:

                       <S>          <C>               <C>              <C>              <C>
                        2001        $   298,848       $   -0-          $    21,312      $   320,160
                        2000            617,726           -0-               10,121          627,847

          Income (loss) from operations:

                        2001        $   170,676       $(20,000)        $  (151,766)     $    (1,090)
                        2000            480,784           -0-             (152,114)         328,670

          Identifiable assets:

                        2001        $ 3,197,196       $   -0-          $ 2,655,365      $ 5,852,561
                        2000          2,018,062           -0-            2,646,980        4,665,042

          Depreciation, depletion and valuation
          charged to identifiable assets:

                        2001        $(2,023,713)      $   -0-          $   (31,100)     $(2,054,813)
                        2000         (1,580,589)          -0-             (132,689)      (1,713,278)

         Capital expenditures:

                        2001        $   351,573       $   -0-          $      -0-       $   351,573
                        2000            129,107           -0-                 -0-           129,107


                                                 8
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Note 4        MAJOR CUSTOMERS

          We derived in excess of 10% of our revenue from various sources (oil
          and gas sales) as follows:

                                                   The Company
                                                   -----------

                                         A               B               C
                                         -               -               -
Year ended:

              September 30, 2001         9%             52%             26%
              September 30, 2000        17%             11%             65%


Note 5        COMMITMENTS AND CONTINGENCIES

          At September 30, 2001 we were committed to the following projects in
          California:

               1.   Sour Grass Prospect 3-D seismic work and lease acquisition
                    costs.

          Total costs of completing the seismic study and lease acquisition
          costs are estimated to be $200,000, our share should be approximately
          $67,000.


Note 6        INCOME TAXES

Our effective income tax rate was 24% for the first quarter ended September 30,
2001 and 24% for the first quarter ended September 30, 2000.


Note 7        SUBSEQUENT EVENTS

During September and October of 2001 we drilled the Brandt 36X-27 well to a
total depth of 9,216'. No commercial oil sands were encountered and this well
was plugged and abandoned on October 12, 2001.

On October 4, 2001 the California Power Authority notified our affiliate, Aspen
Power Systems ("APS") that no further action would be taken on APS' proposal to
build and operate a 323 MW natural gas fired electrical generating plant for the
State of California. Consequently, we have written off a $20,000 advance we
provided APS. Future power plant construction opportunities in California appear
remote, given current economic conditions, and APS has scaled back its efforts
and is seeking other approaches to contracts and financing for power generation
facilities in Solano County, California. There is no assurance these efforts
will be successful.

                                       9

<PAGE>


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

     This should be read in conjunction with the management's discussion and
analysis of financial condition and results of operations contained in our
Annual Report on Form 10-KSB for the year ended June 30, 2001, which has been
filed with the Securities and Exchange Commission. This management's discussion
and analysis and other portions of this report contain forward-looking
statements (as such term is defined in Section 21E of the Securities Exchange
Act of 1934, as amended). These statements reflect our current expectations
regarding our possible future results of operations, performance, and
achievements. These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.

     Wherever possible, we have tried to identify these forward-looking
statements by using words such as "anticipate," "believe," "estimate," "expect,"
"plan," "intend," and similar expressions. These statements reflect our current
beliefs and are based on information currently available to us. Accordingly,
these statements are subject to certain risks, uncertainties, and contingencies,
which could cause our actual results, performance, or achievements to differ
materially from those expressed in, or implied by, such statements. These risks,
uncertainties and contingencies include, without limitation, the factors set
forth in our Form 10-KSB under "Item 6. Management's Discussion and Analysis of
Financial Conditions or Plan of Operation - Factors that may affect future
operating results." We have no obligation to update or revise any such
forward-looking statements that may be made to reflect events or circumstances
after the date of this Form 10-QSB.

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

September 30, 2001 as compared to September 30, 2000
----------------------------------------------------

At September 30, 2001 current assets were $2,915,032 and current liabilities
were $1,335,511 and we had positive working capital of $1,579,521 compared to
current assets of $2,865,752 at September 30, 2000 and current liabilities of
$2,515,562 at the same date, resulting in working capital at September 30, 2000
of $350,190. Our working capital increased approximately $1,229,000 from
September 30, 2000 to September 30, 2001 for several reasons.

     Our current assets increased because cash and cash equivalents decreased
     $29,600 from approximately $2.3 million to approximately $2.27 million.
     Much of this decrease was due to a reduction in advances paid to us from
     joint working interest owners for the drilling of wells. We are currently
     committed to projects in which we have no working interest partners (See
     Notes). Accounts receivable - trade increased by about 8% because of the
     completion of various drilling projects which were in process at year end.
     Prepaid expenses increased approximately $33,700 because of estimated
     income tax payments made to the state of California during the first
     quarter of fiscal 2002.

     Our current liabilities decreased to $1.3 million at September 30, 2001,
     from approximately $2.5 million at September 30, 2000. This decrease was
     due to a number of factors, including a decrease in accounts payable of
     $741,000 due to decreased drilling activity, a decrease of $195,000 in
     advance payments received from joint owners but not expended for drilling
     activities at September 30, 2001. The current portion of notes payable were
     reduced to zero at September 30, 2001 from $224,000 at September 30, 2000.

                                       10

<PAGE>


We anticipate that our current assets will be sufficient to pay our current
liabilities as long as our oil and gas production continues to provide us with
sufficient cash flow. As discussed below, this is dependent, in part, on
maintaining or increasing our level of production and the national and world
market maintaining its current prices for our oil and gas production.

Recent drilling success and the reentry and completion of an acquired property
have added to our cash flow from operations. These successes have been offset by
the decline in production rates from older wells and a significant decline in
the price received from the sale of our products. The average price received for
oil and gas for the quarter ended September 30, 2001 was $22.35 per barrel and
$3.28 per MMBTU of gas compared to $28.73 per barrel and $4.99 per MMBTU of gas
at September 30, 2000, a decline of 22% and 34% respectively.

Our capital requirements can fluctuate over a twelve month period because our
drilling program is usually carried out in California's dry season, from late
April until November, after which wet weather either precludes further activity
or makes it cost prohibitive.

We believe that internally generated funds will be sufficient to finance our
drilling and operating expenses for the next twelve months.

                                       11

<PAGE>


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

September 30, 2001 Compared to September 30, 2000
-------------------------------------------------

For the three months ended September 30, 2001 our 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, which includes income from management fees, for the three
months ended September 30, 2001 decreased approximately $319,000 from $617,726
to $298,848, a 52% decrease. This decrease reflects a decrease in the prices
received for our products and a decrease in production in the Denverton Creek
and Malton Black Butte fields as well as the Kern County oil properties. Our
share of sales of oil and gas for the three month period ended September 30,
2001 were 1,035 barrels of oil and approximately 69,200 MMBTU of gas with the
price received for oil at $22.35 per barrel and $3.28 per MMBTU for gas. This is
a decrease in total oil production compared to the 1,300 barrels of oil produced
in the first quarter of fiscal 2001, and a decrease in natural gas production
when compared to the approximately 105,000 MMBTU of gas when compared to the
production achieved during the first quarter of the 2001 fiscal year. A
significant factor resulting in decreased revenues during the first quarter of
fiscal 2002 was a decrease in the prices received for our production when
compared to prices of $28.73 and $4.99 received for oil and gas respectively
during the first quarter of fiscal 2001.

Oil and gas production costs decreased $31,670 when compared to last quarter
from $57,542 to $25,872. Approximately $30,000 of this decrease was due to
non-recurring workover costs for recompleting wells in upper producing zones in
the first quarter of fiscal 2001.

Depletion, depreciation and amortization increased approximately $41,300 or 65%
from the previous quarter, which is our best estimate of what the full year cost
will be.

Selling, general and administrative expense increased approximately 12% from
$151,295 to $170,112 for the quarter ended September 30, 2001. This increase is
primarily due to salary, consulting and office rental increases.

As a result of our operations for the three months ended September 30, 2001, we
ended the quarter with net loss of $1,090 compared to net income of $328,670 for
the year earlier. This decrease of approximately $330,000 is due to a decrease
in production volumes and the price received for our oil and gas as discussed
earlier.

Interest and other income increased approximately $11,000 to $21,312 and is due
to our maintaining a greater balance of funds in our invested cash accounts.

On October 4, 2001 the California Power Authority notified our affiliate, Aspen
Power Systems ("APS") that no further action would be taken on APS' proposal to
build and operate a 323 MW natural gas fired electrical generating plant for the
State of California. Consequently, we have written off a $20,000 advance we
provided APS. Future power plant construction opportunities in California appear
remote, given current economic conditions, and APS has scaled back its efforts
and is seeking other approaches to contracts and financing for power generation
facilities in Solano County, California. There is no assurance these efforts
will be successful.

                                       12

<PAGE>


In accordance with the requirements of the Securities Exchange Act of 1934, we
have duly caused this report to be signed on our behalf by the undersigned,
thereunto duly authorized.


                                            ASPEN EXPLORATION CORPORATION




                                            By:  /s/  R. V. Bailey
                                            -------------------------------
                                                      R. V. Bailey,
November 9, 2001                                      Chief Executive Officer,
                                                      Principal Financial
                                                      Officer


                                       13