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 MARCH 31, 1998
                                                          --------------

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO_______


Commission File Number 0-9494



                        ASPEN EXPLORATION CORPORATION
--------------------------------------------------------------------------------



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


            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  [ 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 15, 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

                                                    March 31,         June 30,
                                                      1998             1997
                                                   ----------       -----------
                                                   (Unaudited)       (Audited)

Assets
------
Current assets:
  Cash and equivalents .......................     $   572,823      $   238,465
  Precious metals ............................          18,823           18,823
  Accounts receivable ........................         156,584           46,870
  Prepaid expenses ...........................           1,968            3,732
                                                   -----------      -----------
    Total current assets .....................         750,198          307,890
                                                   -----------      -----------
Investment in oil and gas properties,
  at cost (full cost method of
  accounting) ................................       1,544,379        1,315,458
  Less accumulated depreciation,
    depletion, amortization and
    valuation allowance ......................        (922,194)        (899,694)
                                                   -----------      -----------
    Net oil and gas properties ...............         622,185          415,764
                                                   -----------      -----------
Property and equipment, at cost:
  Furniture, fixtures and vehicles ...........         143,559          143,559
  Less accumulated depreciation and
    amortization .............................        (117,319)        (108,098)
                                                   -----------      -----------
    Net property and equipment ...............          26,240           35,461
                                                   -----------      -----------
Undeveloped mining properties, at cost
  less reserve for impairment of
  $193,495 ...................................          31,450          134,354
                                                   -----------      -----------
Cash Surrender Value, life insurance .........         226,958          217,471
                                                   -----------      -----------
    TOTAL ASSETS .............................     $ 1,657,031      $ 1,110,940
                                                   ===========      ===========

                              (Statement Continues)

                 See notes to Consolidated Financial Statements

                                        2

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (Continued)



                                                   March 31,         June 30,
                                                     1998              1997
                                                  ------------      -----------
                                                  (Unaudited)        (Audited)
Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
  Accounts payable & accrued expenses ........     $   452,325      $   118,220
  Advances from joint owners .................         103,237          230,624
  Notes payable - current ....................          40,438              -0-
  Due to related parties .....................          64,118           72,391
                                                   -----------      -----------
Total liabilities ............................         660,118          421,235
                                                   -----------      -----------

Notes Payable - long term ....................         270,799          185,000
                                                   -----------      -----------
Stockholders' equity:
  Common stock, $.005 par value:
     Authorized: 50,000,000 shares
     Issued:  At March 31, 1998:
       5,019,922 and 4,559,922 at June
       30, 1997 ..............................          25,099           22,799
     Outstanding: At March 31, 1998
       4,916,322 and 4,456,322 at
       June 30, 1997
  Capital in excess of par value .............       5,696,459        5,609,359

  Accumulated deficit ........................      (4,995,444)      (5,127,453)
                                                   -----------      -----------
  Total stockholders' equity .................         726,114          504,705
                                                   -----------      -----------
Total liabilities and stockholders'
equity .......................................     $ 1,657,031      $ 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                            Nine Months Ended
                                             March 31,                                    March 31,
                                  --------------------------------             --------------------------------
                                     1998                   1997                  1998                   1997
                                     ----                   ----                  ----                   ----
<S>                               <C>                    <C>                   <C>                    <C> 
Revenues:
  Oil and gas............         $ 239,659              $ 121,470             $ 585,941              $ 284,907
  Mineral................              -0-                     204                  -0-                   2,975
  Interest and other, net             1,495                  1,308                13,383                  9,886
                                  ----------             ----------            ---------              ---------
Total Revenues...........           241,154                122,982               599,324                297,768
                                  ----------             ----------            ---------              ---------
Costs and expenses:
  Oil & gas production...            13,985                  8,830                47,154                 33,456
  Loss on sale of
   precious metals.......              -0-                    -0-                   -0-                  10,002
  Depreciation, depletion
   and amortization......            10,573                 30,510                31,720                 79,548
  Selling, general and
   administrative........            80,603                111,346               381,313                471,217
  Interest expense.......             3,572                   -0-                  7,128                   -0-
                                  ----------             ---------             ---------              --------
Total Costs & Expenses...           108,733                150,686               467,315                594,223
                                  ----------             ---------             ---------              ---------
Net income before income
  taxes..................         $ 132,421              $ (27,704)            $ 132,009              $(296,455)
Provision for income taxes           23,250                   -0-                 23,034                   -0-
Net operating loss
  carryforward applied...           (23,250)                  -0-                (23,034)                  -0-
                                  ----------             ---------             ----------             --------
Net income after income
  taxes..................         $ 132,421              $ (27,704)            $ 132,009              $(296,455)
                                  =========              ==========            =========              ==========
Per share amounts:
  Basic..................         $  .03                 $ (.01)               $  .03                 $ (.07)
                                  ===========            =========             =========              =======
  Diluted................         $  .03                 $ (.01)               $  .03                 $ (.07)
                                  ===========            =========             =========              =======

Weighted average number of
 common shares outstanding        5,016,322              4,356,322             4,806,468              4,356,322
                                  =========              =========             =========              =========
                     
                                         The accompanying notes are an integral
                                                  part of these statements.

                                                             4
</TABLE>


<PAGE>


                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)

                                                     Nine months ended March 31,
                                                        1998            1997
                                                      ---------       ---------
Cash flows from operating activities:

Net income (loss) ..............................      $ 132,009       $(296,455)

Adjustments to reconcile net income
  to net cash provided by operating
  activities:
Services rendered for stock ....................         69,900             -0-
Depreciation, depletion & amortization .........         31,721          79,598
Decrease in precious metals ....................            -0-         203,042

Increase in accounts receivable ................       (109,714)        (30,126)

Increase (decrease) in prepaid
  expenses .....................................          1,764          (3,011)

Increase in accounts payable and
  accrued expenses .............................        206,718          20,103

Increase (decrease) in payable to
  related parties ..............................         (8,273)         49,406
                                                      ---------       ---------

Net cash provided by operating
  activities ...................................        324,125          22,557
                                                      ---------       ---------






                              (Statement Continues)


                                        5

<PAGE>



                 ASPEN EXPLORATION CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                   (Continued)

                                                     Nine months ended March 31,
                                                        1998          1997
                                                      ---------     --------
Cash flows from investing activities:
Additions to undeveloped mining
  properties .......................................     (2,596)     (86,853)
Sale of oil & gas properties .......................        -0-      100,000
Additions to oil & gas properties ..................   (315,421)    (180,677)
Proceeds - prospect fees ...........................     86,500       77,826
Investment in subsidiaries "Aspen
  Recursos de Mexico" and "ISL
  Resources Corporation" ...........................        -0-       (6,664)
Additions to office equipment and
  vehicles .........................................        -0-       (3,050)

Proceeds - sale of mining data .....................    125,000          -0-
Proceeds - return of equipment .....................        -0-        4,100
Additions to cash surrender value ..................     (9,487)     (27,189)
                                                      ---------    ---------
Net cash used in investing activities ..............   (116,004)    (122,507)
                                                      ---------    ---------
Cash flows from financing activities:
Note from officer ..................................      6,000          -0-
Note from consultant ...............................    130,000          -0-
Note from insurance company ........................     15,000      150,000
Repayment of note ..................................    (24,763)         -0-
                                                      ---------    ---------
Net cash from financing activities .................    126,237      150,000
                                                      ---------    ---------
Net (decrease) increase in cash ....................    334,358       50,050
                                                      ---------    ---------

Cash and cash equivalents,
  at beginning of period ...........................    238,465      102,223
                                                      ---------    ---------
Cash and cash equivalents, at end of
  period ...........................................  $ 572,823    $ 152,273
                                                      =========    =========
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)

                                 March 31, 1998

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
nine months ended March 31, 1998 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.

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 and one
oil well,  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 March 31, 1998 or 1997.

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


                                        8

<PAGE>



Note 1 - Basis of Presentation (Continued)

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.

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 March 31, 1998 and March 31, 1997.

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.

                                        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  760,000  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  average  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.



                                       10

<PAGE>



Note 1 - Basis of Presentation (Continued)

The following is a reconciliation of the numerators and denominators used in the
calculation  of basic  and  diluted  earnings  per  share for the three and nine
months ended March 31, 1998:
<TABLE>
<CAPTION>

                                        Three Months Ended                                 Nine Months Ended
                                          March 31, 1998                                     March 31, 1998
                                       -------------------                                 ------------------
                                                                   Per                                           Per
                                    Net                            Share         Net                             Share
                                  Income           Shares          Amount       Income            Shares         Amount
                                  ------           ------          ------       ------            ------         ------
<S>                              <C>               <C>            <C>          <C>               <C>             <C>
Basic EPS:

Net income and
 share amounts                   $ 132,241        5,016,322        $   .03     $ 132,009        4,806,468        $   .03
                                 ---------        ---------        -------     ---------        ---------        -------

Dilutive Securities:

Stock options                                       161,212                                       300,465
                                 ---------        ---------        -------     ---------        ---------        -------

Diluted EPS:

Net income and assumed
share conversions                $ 132,241        5,177,534        $   .03     $ 132,009        5,106,933        $   .03
                                 =========        =========        =======     =========        =========        =======
</TABLE>
 
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.


Note 2    Commitments and Contingencies

At March 31,  1998 the Company  was  committed  to the  following  drilling  and
development projects in California:

         1.       Drill, complete and equip the Emigh 35-1 well.
         2.       Drill, complete and equip the Brocchini 4-1 well.

Total costs for these projects is estimated to be $1,655,000,  of which $158,000
is to be paid by the  Company.  As of March 31,  1998,  the Company had received
approximately  $73,500 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 through  March 31, 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


                                       11

<PAGE>



Note 2 - Commitments and Contingencies (Continued)

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.



                                       12

<PAGE>



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

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

March 31, 1998 as compared to March 31, 1997
--------------------------------------------

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 March 31,  1998
Registrant had cash of $572,823 and working capital of $90,080.

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 $64,000 at March 31,  1998.  At the time of this
filing, Registrant had paid down loans to its officers and affiliated by $24,763
as well as reduced amounts due related parties by $8,273.

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 have  eliminated  the working
capital deficit and will contribute  considerably to the Registrant's  cash flow
in the coming year.

From March 31, 1997 to March 31, 1998, Registrant's working capital increased by
$234,416 to $90,080.  The increase was due to the increased  revenue produced by
oil and gas wells  drilled in the first and second  quarters of this fiscal year
and put on stream  during  the  quarter  ended  December  31,  1997.  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  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.

                                       13

<PAGE>


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 and
April  1998  received  non-refundable  $50,000  and  $75,000  payments  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.

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 $125,000 cash
payment and a commitment to receive an  additional  $125,000 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
                              ---------------------

March 31, 1998 Compared to March 31, 1997
-----------------------------------------

For the nine months ended March 31, 1998 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.

                                       14

<PAGE>



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 nine
months ended March 31, 1998  increased  $301,034,  from $284,907 to $585,941,  a
106%  improvement.  This  increase  reflects  increased  emphasis on  operations
conducted  in  California  and the initial  production  from the Emigh 34-1 well
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 $13,698 from $33,456 to $47,154, a 41%
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,  bringing the
Emigh 2-1 and Brandt  26X-27  wells on  production  in November,  1997,  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 $79,548
to $31,720, a $47,828 reduction or 60%. 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 nine months  ended March 31,
1998.

Selling,  general and  administrative  expenses declined during the three months
ended March 31, 1998 from  $111,346 to $80,603,  a $30,743  decrease or 28%. The
nine month general and  administrative  expense declined  $89,904,  or 19%, from
$471,217 to $381,313.  Both the three and nine month  reductions  were 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.  Registrant  ended the three and nine month periods with a gain
of $132,421 and $132,009,  respectively.  This compares to a loss of $27,704 and
$296,455 a year  earlier.  This net income for the three and nine  months  ended
March 31, 1998 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,  the reduction of legal fees
during the first  quarter of fiscal 1998,  and the  voluntary  20%  reduction of
salary by an officer of Registrant for the months February and March, 1998.


                                       15

<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,
May 15, 1998                                  Chief Executive Officer,
                                              Principal Financial Officer

                                       16