Aspen Exploration Reports Lower Q1 Profit

Aspen Exploration Corporation, an energy company with offices in Bakersfield, California, and Denver, Colorado, on Monday announced results for the company's first fiscal quarter ended September 30,2006. For the first quarter, the company reported revenues of $1,080,000, a decrease of 10%, as compared to the year-earlier period revenues of $1,194,000, and net after tax profit of $271,000, or $0.04 per diluted share, compared to $461,000 a year earlier, or $0.06 per diluted share.

The company reported slightly lower revenues for the quarter ended September 30, 2006, even though gas production increased 8% to 1,741 MCF per day from 1,609 MCF per day for the prior year three-month period. This was due to a 19% decrease in the average gas prices received for the current quarter to a price of $6.08 per MMBTU versus $7.26 per MMBTU for the quarter ended September 30, 2005.

Net income before interest, depletion, depreciation and taxes decreased 34% to $670,000, or $0.09 per diluted share, compared to $896,000, or $0.13 per diluted share for the prior three-month period.

The decrease in company earnings resulted primarily from an increase in our general and administrative expenses of about 117% due substantially to increased audit and accounting fees of approximately $133,000 (required to remain in compliance with the Sarbanes-Oxley Act), and non-cash charges of approximately $55,000, partially as a result of recognition of additional share-based compensation expense, and the amortization of deferred compensation related to the initiation of an investor relations service of $113,000 settled in shares of our common stock. The shares were issued in a prior period and expensed as services are provided. Recognition of share-based compensation expense was the result of the company's implementation of FAS 123® during the quarter. Another factor for the decreased earnings was the fact that the depletion, depreciation and amortization expense increased approximately $226,000 for the three months ended September 30, 2006. This increase of 89% was the result of using the approximate same depletion rate as fiscal 2006, but applying it to a larger full-cost pool that resulted in the higher total depletion taken.