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 March 31, 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                              (I.R.S. 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 May 11, 2001
Common stock, $.005 par value                                 5,637,074

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Part One.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                     ASPEN EXPLORATION CORPORATION AND SUBSIDIARY
                              CONSOLIDATED BALANCE SHEETS

                                        ASSETS

                                                           March 31,       June 30
                                                             2001            2000
                                                             ----            ----
                                                          (Unaudited)     (Audited)

Current Assets:
<S>                                                       <C>            <C>
Cash and cash equivalents, including $1,892,340 and
$417,443 of invested cash at March 31, 2001 and
June 30, 2000 respectively..............................  $ 2,223,005    $   507,382

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

Accounts receivable, trade .............................      376,195        340,177

Prepaid expenses
                                                                5,643          9,259
                                                          -----------    -----------
     Total current assets ..............................    2,623,666        875,641
                                                          -----------    -----------

Investment in oil and gas properties, at cost
(full cost method of accounting) .......................    3,362,850      2,942,712

Less accumulated depletion and valuation allowance .....   (1,728,589)    (1,520,589)
                                                          -----------    -----------

                                                            1,634,261      1,422,123
                                                          -----------    -----------
Property and equipment, at cost:
Furniture, fixtures and vehicles .......................      216,787        201,654

Less accumulated depreciation ..........................     (140,689)      (128,689)
                                                          -----------    -----------

                                                               76,098         72,965
                                                          -----------    -----------

Cash surrender value, life insurance ...................      239,095        239,095
                                                          -----------    -----------

     TOTAL ASSETS ......................................    4,573,120    $ 2,609,824
                                                          ===========    ===========


                                 (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

                                                     March 31,        June 30,
                                                       2001             2000
                                                    (Unaudited)      (Audited)
Current liabilities:
Accounts payable and accrued expenses ..........    $   254,297     $   363,955

Advances from joint owners .....................        502,478         169,713

Income taxes payable ...........................         79,165          23,000

Notes payable - current ........................            -0-         236,746
                                                    -----------     -----------
Total current liabilities ......................        835,940         793,414
                                                    -----------     -----------
Stockholders' equity:

Common stock, $.005 par value:
    Authorized: 50,000,000 shares
    Issued: At March 31, 2001: 5,637,074
    and June 30, 2000: 5,345,938 ...............         26,729          26,729

Capital in excess of par value .................      6,017,610       6,017,610

Accumulated deficit ............................     (2,283,529)     (4,191,096)

Deferred compensation ..........................        (23,630)        (36,833)
                                                    -----------     -----------
Total stockholders' equity .....................      3,737,180       1,816,410
                                                    -----------     -----------
Total liabilities and stockholders' equity .....    $ 4,573,120     $ 2,609,824
                                                    ===========     ===========

                 See Notes to Consolidated Financial Statements

                                       3

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



                                               Three Months Ended        Nine Months Ended
                                                    March 31,                 March 31,
                                                    ---------                 ---------

                                                2001         2000         2001         2000
                                                ----         ----         ----         ----
Revenues:
  <S>                                        <C>          <C>          <C>          <C>
  Oil and gas ............................   $1,109,992   $  252,605   $2,688,142   $  840,343

  Management fees ........................       26,135       30,671      138,397      113,781

  Interest and other, net ................       43,387        1,077       72,533       10,530
                                             ----------   ----------   ----------   ----------
Total Revenues ...........................    1,179,514      284,353    2,899,072      964,654
                                             ----------   ----------   ----------   ----------

Costs and expenses:
  Oil and gas production .................       27,058       33,400      151,585       75,534
  Depreciation, depletion and amortization       77,000       86,925      220,000      237,775
  Aspen Power Systems expense ............          -0-        1,562          -0-       45,356
  Selling, general and administrative ....      146,322      124,296      449,805      375,830
  Interest expense .......................           70        2,226        7,949        9,468
                                             ----------   ----------   ----------   ----------
Total Costs and Expenses .................      250,450      248,409      829,339      743,963
                                             ----------   ----------   ----------   ----------
Net income before taxes ..................      929,064       35,944    2,069,733      220,691
                                             ----------   ----------   ----------   ----------
Provision for income taxes ...............       82,165          -0-      162,165          -0-
                                             ----------   ----------   ----------   ----------
Net income ...............................   $  846,899   $   35,944   $1,907,568   $  220,691
                                             ==========   ==========   ==========   ==========
Basic earnings per common share ..........   $      .16   $      .01   $      .35   $      .04
                                             ==========   ==========   ==========   ==========
Diluted earnings per common share ........   $      .15   $      .01   $      .34   $      .04
                                             ==========   ==========   ==========   ==========
Basic weighted average number of
common shares outstanding ................    5,401,678    5,191,322    5,401,678    5,191,322
                                             ==========   ==========   ==========   ==========
Diluted weighted average number of
common shares outstanding ................    5,661,678    5,531,162    5,661,678    5,531,162
                                             ==========   ==========   ==========   ==========


                            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)



                                                     Nine months ended March 31,
                                                         2001           2000
                                                     ---------------------------
Cash flows from operating activities:

Net income .......................................   $ 1,907,567    $   220,691

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

  Depreciation, depletion & amortization .........       220,000        237,775
  Amortization of deferred compensation ..........        13,203          5,667

Changes in assets and liabilities:

  Increase in accounts receivable ................       (36,018)       (31,629)
  Decrease in prepaid expense ....................         3,616          3,663
  Increase in accounts payable and accrued expense       279,272         74,346
                                                     -----------    -----------
  Net cash provided by operating activities ......     2,387,640        510,513
                                                     -----------    -----------
Cash flows from investing activities:

  Additions to oil & gas properties ..............      (420,138)      (396,542)
  Purchase of office equipment & vehicle .........       (21,133)       (13,995)
  Sale of idle equipment at cost .................         6,000            -0-
                                                     -----------    -----------


  Net cash used in investing activities ..........      (435,271)      (410,537)
                                                     -----------    -----------
Cash flows from financing activities:

  Repayment of notes payable .....................      (236,746)      (112,327)
                                                     -----------    -----------
  Net cash used in financing activities ..........      (236,746)      (112,327)
                                                     -----------    -----------
  Net increase in cash and cash equivalents ......     1,715,623        (12,351)

  Cash and cash equivalents, beginning of year ...       507,382        335,603
                                                     -----------    -----------
  Cash and cash equivalents, end of period .......   $ 2,223,005    $   323,252
                                                     ===========    ===========
  Interest paid ..................................   $     7,949    $     7,583
                                                     ===========    ===========
  Income taxes paid ..............................   $    83,000    $       -0-
                                                     ===========    ===========


                     The accompanying notes are an integral
                            part of these statements.

                                       5

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                          ASPEN EXPLORATION CORPORATION

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                                 March 31, 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, 2000.

          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,
          2000.


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 nine months ended March 31, 2001 and 2000:




                                               March 31,                             March 31,
                                                 2001                                  2000
                                                 ----                                  ----

                                                             Per                                   Per
                                    Net                      Share        Net                      Share
                                    Income       Shares      Amount       Income       Shares      Amount
                                    ------       ------      ------       ------       ------      ------
Basic earnings per share:

  <S>                               <C>         <C>          <C>         <C>          <C>           <C>
  Net income and
  share amounts                     $1,907,568  5,401,678     $.35       $220,691     5,191,322     $.04

  Dilutive securities
  stock options                                   380,000                               560,000

  Repurchased shares                             (120,000)                             (220,160)
                                    ---------------------------------------------------------------------
Diluted earnings per share:

  Net income and assumed
  share conversion                  $1,907,568  5,661,678      $.34      $220,691     5,531,162     $.04
                                    ==========  =========      ====      ========     =========     ====


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 No. 131). The adoption of
          SFAS No. 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 nine months ended March 31, 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, with the exception of the
          elimination of the mineral and power plant segments which we are no
          longer active in and are not material. 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 $420,000 for the development and acquisition
          of oil and gas properties.

          Segment information consists of the following for the nine months
          ended March 31:

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

                             <S>                     <C>               <C>              <C>
                             2001                    $ 2,826,539       $    72,533      $ 2,899,072
                             2000                        954,124            10,530          964,654

         Income (loss) from operations:

                             2001                    $ 2,304,789       $  (397,221)     $ 1,907,568
                             2000                        652,590          (431,899)         220,691

         Identifiable assets:

                             2001                    $ 2,010,456       $ 2,562,664      $ 4,573,120
                             2000                      1,371,933           668,195        2,040,128

         Depreciation, depletion and valuation
         charged to identifiable assets:

                             2001                    $(1,728,589)      $  (140,689)     $(1,869,278)
                             2000                     (1,081,902)         (129,544)      (1,211,446)

         Capital expenditures:

                             2001                    $   420,138       $    21,133      $   441,271
                             2000                        396,542            13,995          410,537

                                                 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         D        E
                                -       -        -         -        -
          Year ended:

           March 31, 2001       -       -       35%       12%       49%
           March 31, 2000       73%    12%       -         -         -


Note 5            NOTES PAYABLE

          We owe the following debt:

                                                      March 31,       June 30,
                                                        2001            2000
                                                     --------------------------
          Borrowings from life insurance company
          on cash surrender value of officer life
          insurance, interest at 6% per annum,
          collateralized by cash surrender value
          of policy.                                 $    -0-        $ 155,430

          Note payable to related party,
          Interest at 11.21% per annum,
          monthly principal and interest
          payments of $4,269, due September,
          2000, collateralized by working
          interests in the Emigh lease.              $    -0-           12,566

          Note payable to third party for
          the acquisition purchase of
          producing oil and gas properties.
          Interest at 5.475% per annum.
          Principal payments of $68,875 are
          due in January 2001.  There is no
          collateral for this note.                       -0-           68,750
                                                      ---------      ---------
          Total notes payable                             -0-          236,746

          Less current portion                            -0-          236,746
                                                      ---------      ---------
          Long term portion                           $   -0-        $     -0-
                                                      =========      =========

                                        9

<PAGE>


Note 6            COMMITMENTS AND CONTINGENCIES

          At March 31, 2001 the Company was committed to the following drilling
          and development projects in California:

                  Project                                     Aspen Cost
                  -------                                     ----------
                  Emigh 35-5                                   $172,000
                  Emigh 34-3                                     85,000
                  Emigh 34-2                                    172,000
                  Armstrong 17-4                                338,000
                  Zimmerman 1-24 Recompletion                    16,000
                                                               --------

                                Total Estimated Costs          $783,000
                                                               ========


Note 7            SUBSEQUENT EVENTS

          During May 2001 the Emigh 35-5 well, in which we have approximately
          23.80% working interest, tested 2000 MCFPD and will go on production
          by June 1, 2001. The Emigh 34-3 is currently drilling but has not
          reached total depth. The remaining wells in our drilling program have
          not been spudded as of the date of this filing.

          Prices for our natural gas are estimated to average $9.18 and $12.05
          per MMBTU for the months of April and May 2001. June prices have not
          yet been posted.

                                       10

<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, 2000, 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
-------------------------------

March 31, 2001 as compared to March 31, 2000
--------------------------------------------

At March 31, 2001 current assets were $2,623,666 and current liabilities were
$835,940 and we had positive working capital of $1,787,726 compared to current
assets of $875,641 at June 30, 2000 and current liabilities of $793,414 at the
same date, resulting in working capital at June 30, 2000 of $82,227. Our working
capital increased more than twenty times from June 30, 2000 to March 31, 2001
for several reasons.

     Our current assets increased primarily because cash and cash equivalents
     increased from approximately $508,000 to approximately $2.2 million because
     of the higher prices being received for oil and gas production, which
     exceeded our current cash requirements at March 31, 2001.

     Our current liabilities remained fairly constant when comparing the nine
     months ended March 31, 2001 with our fiscal year end of June 30, 2000.
     Accounts and notes payable decreased by approximately $346,000, while
     advance payments from joint owners for unexpended drilling costs increased
     by approximately $333,000, reflecting increased drilling activity caused by
     improved weather conditions in California. (See Note 6, Commitments and
     Contingencies.)

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.

                                       11

<PAGE>


In light of recent successful drilling operations, the acquisition of producing
properties and the continued improvement in oil and gas prices received by us,
increased revenues should continue to have a positive effect on our working
capital and contribute significantly to its cash flow in the year ahead.

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.

Although our drilling and development plans have not been finalized for the
coming year, at March 31, 2001 we are committed to drill four additional wells
at an estimated cost to us of approximately $783,000, with the balance
(approximately $2.9 million) to be paid by joint owners in the properties,
including certain affiliated investors. For the nine months ended March 31, 2001
we invested $420,000 in our oil and gas properties compared to approximately
$397,000 for the nine month period in the preceding fiscal year. We anticipate
additional drilling will occur in fiscal 2001.

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

                                       12

<PAGE>


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

March 31, 2001 Compared to March 31, 2000
-----------------------------------------

For the nine months ended March 31, 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 nine
months ended March 31, 2001 increased approximately $1,848,000 from $840,000 to
$2,688,000, a 220% increase. This increase reflects our continued emphasis on
operations conducted in California and increased production from both the
Denverton Creek and Malton Black Butte fields even though our production overall
decreased. Our share of sales of oil and gas for the nine month period ended
March 31, 2001 were 3959 barrels of oil and approximately 293,000 MMBTU of gas
with the price received for oil at $27.00 per barrel and $8.86 per MMBTU for
gas. This is a decrease in total oil production compared to the 4721 barrels of
oil produced in the first half of fiscal 2000, and an increase in natural gas
production of 17,400 MMBTU when compared to the approximately 275,600 MMBTU of
gas production achieved during the first nine months of the 2000 fiscal year. A
significant factor resulting in the substantially increased revenues during the
nine months of fiscal 2001 was an increase in the prices received for our
production when compared to prices of $21.70 and $3.05 received for oil and gas
respectively during the first nine months of fiscal 2000.

Oil and gas production costs increased $76,051 when compared to last nine month
period, from $75,534 to $151,585. Approximately $67,500 of this increase was due
to non-recurring workover costs for recompleting wells in upper producing zones,
the balance, approximately $8,500 reflects the addition of new wells and
compression costs associated with older producing gas wells.

Depletion, depreciation and amortization decreased $17,775 or 7.5% for the year,
which is our best estimate of what the full year cost will be.

Selling, general and administrative expense increased approximately 20% from
$375,830 to $449,805 for the nine months ended March 31, 2001. This increase is
primarily due to salary and office rental increases and the amortization of
deferred officer compensation costs of $13,200.

As a result of our operations for the nine months ended March 31, 2001, we ended
the period with net income of $1,907,568 after taxes compared to $220,691 for
the year earlier. This increase of approximately $1,687,000 is due to an
increase in production and the price received for our oil and gas as discussed
earlier as well as the fact that our costs of production did not rise as quickly
as the prices received for our production.

Interest and other income increased approximately $62,000 to $72,533 and is due
to our maintaining a greater balance of funds in our invested cash accounts, and
consulting income received from an affiliate of approximately $23,000 for
services rendered by our president, R. V. Bailey.

With Management's continued emphasis on cost control, successful drilling and
production operations and its improving gas sales, we believe our net income and
earnings per share will continue to grow, assuming oil and gas prices maintain
their current level or increase.

                                       13

<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,
May 11, 2001                                         Chief Executive Officer,
                                                     Principal Financial Officer


                                       14