U. S. SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549


                                  FORM 10-QSB

(MARK ONE)

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

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1997
                                               -----------------


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

                 FOR THE TRANSITION PERIOD FROM ______ TO_______


                         Commission File Number 0-9494
                                    



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


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


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

                                                         (303)  639-9860


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

                             Yes  [   ]   No  [ X ]

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

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


                                        1

<PAGE>



Part One.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                   December 31,       June 30,
                                                      1997             1997
                                                   -----------      -----------
                                                   (Unaudited)       (Audited)
Assets
------
Current assets:
  Cash and equivalents .......................     $    66,982      $   238,465
  Precious metals ............................          18,823           18,823
  Accounts receivable net of allowance
   for doubtful accounts of $12,495 ..........       1,491,076           46,870

  Prepaid expenses and other .................           1,968            3,732
                                                   -----------      -----------
    Total current assets .....................       1,578,849          307,890
                                                   -----------      -----------
Investment in oil and gas properties,
  at cost (full cost method of
  accounting) ................................       1,512,642        1,315,458
  Less accumulated depreciation,
    depletion, amortization and
    valuation allowance ......................        (914,694)        (899,694)
                                                   -----------      -----------
    Net oil and gas properties ...............         597,948          415,764
                                                   -----------      -----------
Property and equipment, at cost:
  Furniture, fixtures and vehicles ...........         143,559          143,559
  Less accumulated depreciation and
    amortization .............................        (114,245)        (108,098)
                                                   -----------      -----------
    Net property and equipment ...............          29,314           35,461
                                                   -----------      -----------
Undeveloped mining properties, at cost .......         156,450          134,354
                                                   -----------      -----------
Cash Surrender Value, life insurance .........         226,958          217,471
                                                   -----------      -----------
    TOTAL ASSETS .............................     $ 2,589,519      $ 1,110,940
                                                   ===========      ===========

                              (Statement Continues)
                 See notes to Consolidated Financial Statements

                                        2

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)



                                                   December 31,      June 30,
                                                      1997             1997
                                                   ------------     -----------
                                                   (Unaudited)       (Audited)
Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
  Accounts payable & accrued expenses ........     $    66,830      $   118,220
  Advances from joint owners .................       1,496,463          230,624
  Notes payable - current ....................          45,693              -0-
  Due to related parties .....................         105,784           72,391
                                                   -----------      -----------
Total liabilities ............................       1,714,770          421,235
                                                   -----------      -----------
Notes payable - long term ....................         281,056          185,000
                                                   -----------      -----------
Stockholders' equity:
  Common stock, $.005 par value:
     Authorized: 50,000,000 shares
     Issued:  At December 31, 1997:
       5,019,922 and 4,559,922 at June
       30, 1997
     Outstanding: At December 31, 1997
       4,916,322 and 4,556,322 at
       June 30, 1997 .........................          25,099           22,799
  Capital in excess of par value .............       5,696,459        5,609,359

  Accumulated deficit ........................      (5,127,865)      (5,127,453)
                                                   -----------      -----------

  Total stockholders' equity .................         593,693          504,705
                                                   -----------      -----------
Total liabilities and stockholders'
equity .......................................     $ 2,589,519      $ 1,110,940
                                                   ===========      ===========

                     The accompanying notes are an integral
                            part of these 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,
                                                 --------------------------------           ---------------------------------
                                                    1997                 1996                  1997                   1996
                                                    ----                 ----                  ----                   ----
Revenues:
<S>                                              <C>                  <C>                   <C>                   <C>        
  Oil and gas .........................          $   244,922          $    87,380           $   346,282           $   163,437
  Mineral .............................                  -0-                2,771                   -0-                 2,771
  Interest and other, net .............                6,118                4,338                11,888                 8,578
                                                 -----------          -----------           -----------           -----------
Total Revenues ........................              251,040               94,489               358,170               174,786
                                                 -----------          -----------           -----------           -----------

Costs and expenses:
  Oil & gas production ................               27,312               15,540                33,169                24,626
  Loss on sale of
   precious metals ....................                  -0-               10,002                   -0-                10,002
  Depreciation, depletion
   and amortization ...................               10,574               14,519                21,147                49,038
  Selling, general and
   administrative .....................              186,146              185,810               300,710               359,871
  Interest expense ....................                3,556                  -0-                 3,556                   -0-
                                                 -----------          -----------           -----------           -----------
Total Costs & Expenses ................              227,588              225,871               358,582               443,537
                                                 -----------          -----------           -----------           -----------
NET INCOME (LOSS) .....................          $    23,452          $  (131,382)          $      (412)          $  (268,751)
                                                 ===========          ===========           ===========           ===========

Basic earnings (loss) per
  common share ........................              $ (.- )                 (.03)              $ (.- )                  (.06)
                                                 ===========          ===========           ===========           ===========

Weighted average number of
 common shares outstanding ............            4,877,920            4,321,322             4,877,920             4,321,322
                                                 ===========          ===========           ===========           ===========


            
                                        The accompanying notes are an integral
                                               part of these statements.

                                                            4
</TABLE>

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                                                   Six months ended December 31,
                                                      1997              1996
                                                   -----------      -----------
Cash flows from operating activities:
Net income (loss) ............................     $      (412)     $  (268,751)
Adjustments to reconcile net income
  to net cash provided by operating
  activities:
Services rendered for stock and
  options ....................................          69,900              -0-
Depreciation, depletion & amortization .......          21,147           49,038
Decrease in precious metals ..................             -0-          203,042
Decrease (increase) in accounts
  receivable .................................      (1,444,206)           4,299
Increase (decrease) in prepaid
  expenses ...................................           1,764           (3,011)
Increase (Decrease) in accounts
  payable and accrued expenses ...............       1,214,449         (150,628)
Increase in payable to related parties .......          33,393           31,637
                                                   -----------      -----------

Net cash provided by (used in)
  operating activities .......................        (103,965)        (134,374)
                                                   -----------      -----------





                              (Statement Continues)


                                        5

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                                   (Continued)

                                                             Six months
                                                          ended December 31,
                                                         1997           1996
                                                       ---------     ---------
Cash flows from investing activities:
Additions to undeveloped mining
  properties ............................                 (2,596)      (82,760)
Sale of oil & gas properties ............                     -0-      100,000
Development of oil & gas properties .....               (283,684)     (119,632)
Proceeds - prospect fees ................                 86,500        77,826
Investment in subsidiaries "Aspen
  Recursos de Mexico" and "ISL
  Resources Corporation" ................                     -0-       (4,654)
Additions to office equipment and
  vehicles ..............................                     -0-       (2,396)
Proceeds - return of equipment ..........                     -0-        4,100
Additions to cash surrender value .......                  (9,487)     (21,676)
                                                        ---------    ---------
Net cash used in investing activities ...                (209,267)     (49,192)
                                                        ---------    ---------
Cash flows from financing activities:
Note from officer .......................                   6,000          -0-
Note from consultant ....................                 130,000          -0-
Note from insurance company .............                  15,000      125,000
Repayment of note .......................                  (9,251)         -0-
                                                        ---------    ---------
Net cash from financing activities ......                 141,749      125,000
                                                        ---------    ---------
Net (decrease) in cash ..................                (171,483)     (58,566)
                                                        ---------    ---------

Cash and cash equivalents,
  at beginning of period ................                 238,465      102,223
                                                        ---------    ---------
Cash and cash equivalents, 
  at end of period ......................               $  66,982    $  43,657
                                                        =========    =========
Non cash transactions ...................               $  19,500    $    -0-
                                                        =========    =========


                     The accompanying notes are an integral
                            part of these statements.

                                        6

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                                   (Unaudited)

                                December 31, 1997


Note 1 - Basis of Presentation

The accompanying unaudited, consolidated financial statements have been prepared
in  accordance  with Item 310 of  Regulation  S-B and do not  include all of the
information and footnotes required by generally accepted  accounting  principles
for complete consolidated  financial  statements.  In the opinion of management,
all  adjustments   (consisting  of  normal  recurring  adjustments)   considered
necessary for a fair presentation have been included.  Operating results for the
six months ended December 31, 1997 are not necessarily indicative of the results
that may be expected for the fiscal year ending June 30, 1998.  These statements
should be read in conjunction  with the  consolidated  financial  statements and
notes  thereto  included in Form 10-KSB for the fiscal year ended June 30, 1997,
which is available without cost from Aspen Exploration Corporation upon request.

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

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

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

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

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

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

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

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

                                        7

<PAGE>



Note 1 - Basis of Presentation (Continued)

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

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

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

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

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

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

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

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

Precious  metals   inventories  are  valued  at  the  lower  of  cost  (specific
identification  method) or market.  There was no allowance for unrealized losses
against inventories due to market decline at December 31, 1997 or 1996.

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

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

                                        8

<PAGE>



Note 1 - Basis of Presentation (Continued)



Depletion  and   amortization   of  the  full-cost  pool  is  computed  using  a
unit-of-production method based on proved reserves as determined annually by the
Company and independent engineers. An additional depletion provision in the form
of a  valuation  allowance  is  made  if  the  costs  incurred  on oil  and  gas
properties, or revisions in reserve estimates, cause the total capitalized costs
of oil and gas  properties  in the cost  center  to  exceed  the  capitalization
ceiling.  The  capitalization  ceiling  is the sum of (1) the  present  value of
future net revenues  from  estimated  production  of proved oil and gas reserves
applicable to the cost center plus (2) the lower of cost or estimated fair value
of the cost center's unproved properties less (3) applicable income tax effects.
The valuation allowance was $281,720 at December 31, 1997 and December 31, 1996.

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

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

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

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

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

The Company  capitalizes  all costs  associated  with  acquiring,  exploring and
developing   mineral   properties,   including   certain  internal  costs  which
specifically  relate to each mining property area ("cost  center").  Capitalized
costs are  deferred  until the area of interest to which they relate is put into
operation,  sold, abandoned or impaired. The Company's pro rata share of advance
mineral royalties,  bonuses and other cash payments received by the Company from
joint  venture  or other  exploration  participants  reduce the amount of a cost
center as a recovery of capitalized  costs. The excess of the Company's pro rata
share of advance mineral royalties,  bonuses and other cash payments received by
the  Company  from  joint  venture  or  other   exploration   participants  over
capitalized  costs in a specific  cost center are  recognized  as revenue in the
period received. The Company's pro rata share of costs incurred by the Nome Gold
Joint Venture that are associated with finding joint venture partners to explore
and develop  mining  properties  are expensed as  incurred,  and are included in
selling,  general  and  administrative  expenses.  Gains  or  losses  on sale or
abandonment of mining properties are charged to current operations.

                                        9

<PAGE>



Note 1 - Basis of Presentation (Continued)


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

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

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

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

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

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

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

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

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


                                       10

<PAGE>



Note 2            Commitments and Contingencies

At December  31, 1997 the Company was  committed to the  following  drilling and
development projects in California:

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

Total costs for these projects was estimated to be $1,789,000, of which $270,000
was to be paid by the Company. As of December 31, 1997, the Company had received
approximately  $1,496,000 in  prepayments  from third party  investors for their
share of the projects outlined above.

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

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

The Company entered into an employment  agreement with Robert Cohan on April 16,
1997,  which  provides  for  the  payment  of  $85,000  for  the  first  year of
employment,  plus reimbursement of travel,  entertainment,  medical expenses and
certain office costs, including health insurance and the payments on a truck. If
the Company wishes to employ Mr. Cohan for an additional 12 months and Mr. Cohan
wishes to continue  his  employment  with the  Company,  the renewal  employment
agreement is  effective  April 16, 1998 to April 15, 1999 at the rate of $90,000
per year.



                                       11

<PAGE>



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

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

December 31, 1997 as compared to December 31, 1996
--------------------------------------------------

Registrant  has  sustained  operating  losses  in  recent  years.  In  addition,
Registrant has used substantial amounts of working capital in its operations. At
June 30, 1997  current  liabilities  exceeded  current  assets by  $113,345  and
Registrant had a working  capital  deficit to that extent.  At December 31, 1997
current   liabilities   exceeded  current  assets  by  $135,921.   Consequently,
Registrant has been required to defer payment of certain  accounts payable which
were otherwise due.

In order to provide interim financing,  Registrant has withdrawn $185,000 during
fiscal 1997 and an additional $15,000 in September,  1997 against a split dollar
insurance plan and borrowed $6,000 from an officer.  Further,  during August and
October of 1997,  Registrant has borrowed an additional  $130,000 to finance its
share of drilling an offset well on the Emigh  property  from an  affiliate.  In
addition,  officers of the  Registrant  have elected to defer a portion of their
salary and expense reimbursements.  At June 30, 1997, the amount due to officers
was approximately $72,000 and $106,000 at December 31, 1997. At the time of this
filing, Registrant owed its officers approximately $122,000.

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

From  December  31, 1996 to December  31,  1997,  Registrant's  working  capital
decreased  by  $37,044  to a  negative  $135,921.  The  decrease  was due to the
expenditure of funds by Registrant for its necessary  continuing  operations and
an increase in current  liabilities  as officers  agreed to defer  salaries  and
expense reimbursements. Registrant received no additional revenues from the sale
of gold following  October 1995 to compensate for the expenditures and increased
current  liabilities.  Therefore,  commencing in fiscal 1996 Registrant reviewed
all aspects of its  operations  in an effort to reduce  expenditures  as much as
possible while making efforts to preserve  Registrant's assets and build up cash
flow. These decisions  included:  the sale of Registrant's oil and gas assets in
Montana, North Dakota,  Oklahoma and Texas; the decision to defer the payment of
portions  of  salaries  and  expense  reimbursements;   the  decision  to  defer
compliance with Registrant's reporting obligations under the Securities Exchange

                                       12

<PAGE>



Act of 1934, as amended,  and the decision to concentrate on the  development of
cash flow from oil and gas  operations  in  California,  in which a former  (now
current) officer of Registrant has significant experience. Based on Registrant's
view of the uranium industry,  Registrant also believed that the market would be
receptive to an attractive  uranium  prospect,  although since that decision was
made the market for uranium has not improved as management had anticipated.

These  decisions  resulted in  Registrant  sharing  certain oil and gas drilling
opportunities with third party investors  (including some affiliated  investors)
and taking a reduced  interest until after payout to the third party  investors.
Payout in several of the wells has occurred, and consequently  Registrant is now
receiving increased revenues from its oil and gas operations.  This commenced in
the first  quarter of calendar  year 1998.  In addition,  Registrant in February
1998 received a  non-refundable  $50,000 payment from an  unaffiliated  investor
interested  in  pursuing  Registrant's  uranium  prospects.  In  addition,  this
investor has made  non-binding  commitments  to advance  additional  funds if it
chooses to pursue this project further.

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

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

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

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

December 31, 1997 Compared to December 31, 1996
-----------------------------------------------

For the six months ended December 31, 1997 Registrant's  operations continued to
be focused on the production of oil and gas, and the  investigation for possible
acquisition of producing oil and gas properties and properties  prospective  for
uranium production.

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<PAGE>





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

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

Oil and gas revenues,  which includes income from  management  fees, for the six
months ended December 31, 1997 increased $182,845,  from $163,437 to $346,282, a
112%  improvement.  This  increase  reflects  increased  emphasis on  operations
conducted in California  and the initial  production  from the Emigh lease which
came on stream in November, 1996, as well as the Emigh 2-1 and the Brandt 26X-27
wells which came on line during November, 1997.

Oil and gas production  expenses increased $8,543 from $24,626 to $33,169, a 35%
increase. This increase was due in large part to extensive repair work performed
on the Brandt  16X-27  well in the second  quarter of fiscal 1998 and was offset
somewhat by the sale of all non- California properties which had relatively high
operating  costs and higher  production  tax rates in  November  of 1996.  Also,
Registrant had a higher  percentage of gas wells than oil wells which  typically
have much lower operating costs.

Depletion,  depreciation and amortization decreased significantly,  from $49,038
to $21,147, a $27,891 reduction or 57%. This reduction was due primarily because
of the sale of  marginal  short  lived  properties  in  November of 1996 and the
addition of longer lived gas reserves during the year.

Selling, general and administrative expenses remained fairly constant during the
three  months  ended  December  31, 1997 when  compared to  December  31,  1996.
However,  the six  months  expenses  decreased  by  approximately  $59,000  from
September  30, 1996 to  September  30, 1997 from  $359,871  to  $300,710,  a 16%
decrease  primarily  because  Registrant was no longer  incurring legal expenses
associated  with the Newmont  lawsuit which was settled in October  1997.  After
preliminary decisions adverse to Registrant, plaintiff and defendant agreed to a
stipulation  whereby the litigation,  including all claims,  was terminated with
each party paying its own legal costs.  As a result of  Registrant's  operations
for the three and six months ended December 31, 1997. Registrant ended the three
and six month  period with a gain of $23,452  and a loss of $412,  respectively.
This compares to a loss of $131,382 and $268,751 a year earlier. This net income
and minor  loss for the three and six  months  ended  December  31,  1997 is the
result of increased  revenues generated by new wells put on line during the past
twelve  months,  the reduction of depletion  expense due to the sale of marginal
properties  in November  1996 and the  reduction  of legal fees during the first
quarter of fiscal 1998.

                                       14

<PAGE>


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


                                        ASPEN EXPLORATION CORPORATION
                                                (Registrant)




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

                                       15