ASPEN EXPLORATION CORPORATION
LETTER TO SHAREHOLDERS
30 January 2008


On January 9, 2008, Robert A. (Bobby) Cohan, President and CEO of Aspen, suffered a stroke in his home town of Bakersfield, California, and, as a result, his right side was paralyzed. He was taken immediately to a hospital where the problem was diagnosed and treatment began. Mr. Cohan has been making steady progress in recovering since the stroke occurred and he is now able to perform a number of functions that he could not perform shortly after the stroke took place. He is in rehabilitation and therapy is ongoing in Bakersfield. It is not possible to predict the outcome at this time but we are hoping for a full and complete recovery.

A Form 8-K was filed by Aspen on January 16, 2008 that outlined the measures taken to ensure the continued successful operation of the company during Mr. Cohan’s recovery. Mr. R. V. Bailey, founder of the company as well as board chairman, has been appointed by the board to the position of interim CEO and vice president of exploration and administration. Mr. Kevan Hensman, a member of the board of directors of Aspen, has been appointed by the board to the interim position of CFO and vice president of operations and finance. Aspen has two operations bases: the executive office in Bakersfield, California, and an administrative office in Denver, Colorado.

Aspen’s production is primarily high BTU gas in California and the production has remained essentially unchanged since last month. We also have an interest in oil production in Montana. We anticipate no significant changes in production rates in the coming months. Aspen’s engineering consultants and contract field engineers continue to do a fine job of maintaining and efficiently managing all of Aspen’s wells. Aspen has historically not carried out drilling in California in the winter months because of typically wet ground conditions which make the operations more expensive.

Plans are currently being formulated for the 2008 exploration campaign. In its California activities Aspen has always relied on significant assistance from consultants in the planning and implementation of its drilling program. Our California-based geophysical consultants have done a superb job of interpreting 3D-seismic information in order to locate drill sites and to propose drilling strategies to successfully identify what are often multiple drilling targets in any one well. Their selections have resulted in the high historical success rates of Aspen’s exploration wells. Our major petroleum engineering consultant, who also lives in California, has done outstanding work in the planning and implementation of drilling and completion procedures. Aspen is counting on our consultants for continued success.

Land and leasing functions for Aspen have historically been provided by professional contract landmen who have been instrumental in the assemblage of leases in areas of favorable geology where Aspen may wish to drill exploration wells. Lease records maintenance, document preparation, administrative functions, as well as a number of other chores, are handled at the Denver office under the direction of Office Manager Judy Shelton. Legal matters pertaining to oil and gas leases or production sales or purchases are handled by attorneys in California on an as-needed basis. Accounting in Bakersfield, including billings to working interest owners and distribution of revenue, is carried out by a consultant and a CPA firm while preparation of audited documents is handled by our independent accountants, Gordon Hughes & Banks, LLP in Denver. Securities matters are under the supervision of our outside counsel, Burns, Figa & Will, PC, in Englewood, CO.

The first quarter of Aspen’s fiscal year is typically the time for planning the year’s exploration and development program; this planning is currently under way. Aspen’s drilling program for spring 2008 will involve some development wells drilled in existing Aspen project areas as well as some development projects in areas that are new to Aspen. A major 3D-seismic acquisition project is scheduled for early spring (weather permitting) that could lead to a substantial number of new prospects, some of which could be drilled in the fall of this year.

To summarize, we anticipate no interruption in Aspen’s production operations and foresee no obstacles to the continued growth of Aspen during Mr. Cohan’s recovery period. Corporate management continues to seek opportunities for new projects as well as to acquire additional interests in producing properties. For example, within the past two weeks Aspen has agreed to purchase an interest in the producing Emigh 35-2 gas well, which has a very stable production rate.

See Aspen’s web site at www.aspenexploration.com for additional information and to keep abreast of ongoing activities. Click on "slide show" to view the various projects in which Aspen participates.

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Disclaimer

This letter and our website referenced above contain information that is “forward-looking” in that it describes events and conditions, which Aspen Exploration Corporation (“Aspen”) reasonably expects to occur in the future. Expectations for the future performance of the business of Aspen are dependent upon a number of factors, and there can be no assurance that Aspen will achieve the results as contemplated herein and there can be no assurance that Aspen will be able to conduct its operations or production from its properties will continue as contemplated herein. Certain statements contained in this report using the terms “may,” “expects to,” and other terms denoting future possibilities, are forward-looking statements. The accuracy of these statements cannot be guaranteed as they are subject to a variety of risks, which are beyond Aspen’s ability to predict, or control and which may cause actual results to differ materially from the projections or estimates contained herein. These risks include, but are not limited to: the possibility that the described operations (including any proposed exploration or development drilling) will not be completed on economic terms, if at all, or the estimates of reserves may not be accurate. The exploration for, and development and production of, oil and gas are enterprises attendant with high risk, including the risk of fluctuating prices for oil and natural gas, imports of petroleum products from other countries, the risks of not encountering adequate resources despite expending large sums of money, and the risk that test results and reserve estimates may not be accurate, notwithstanding appropriate precautions. Many of these risks are described herein and in Aspen’s annual report on Form 10-KSB, and it is important that each person reviewing this letter and reviewing our website understand the significant risks attendant to the operations of Aspen. Aspen disclaims any obligation to update any forward-looking statement made herein.