SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report July 31, 1998
ASPEN EXPLORATION CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-9494 84-0811316
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
Incorporation)
Suite 208, 2050 S. Oneida St., Denver CO 80224
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Registrant's telephone number 303-639-9860
N/A
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(Former name or former address, if changed since last report.)
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Item 5: Other Events
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Purchase and Sale Agreement with D. E. Craggs, Inc. (Craggs).
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On July 16, 1998, Aspen Exploration Corporation (OTCBB:"ASPN") acquired a
net 21% working interest (16.17% net revenue interest) in two natural gas units,
the Johnson and Gay Units, in addition to a 5.00% royalty interest in the Gay
Unit, located in Tehama and Glenn Counties, California. Aspen acquired a 100%
working interest in the two properties from D. E. Craggs, Inc., an unaffiliated
third party for $275,000 in cash and 275,000 shares of Aspen's restricted common
stock valued at $1.00 per share. Simultaneously with the acquisition Aspen sold
a 79% working interest in the two prospects to certain unaffiliated and three
affiliated purchasers for a total price of $477,950 ($6,050 per one percent
working interest, as compared to Aspen's purchase price of $5,500 per one
percent working interest). The affiliated purchasers are Aspen's president, R.V.
Bailey, vice president, Robert Cohan, and consulting accountant, Ray Davis, who
acquired working interests of 3%, 2%, and 5%, respectively.
The effective date of the acquisition and disposition was June 30, 1998.
Pursuant to the agreement with Craggs, Aspen paid Craggs 25% of the cash and
stock at the closing ($68,750 and 68,750 shares) and is obligated to pay an
additional 25% (plus interest on the cash from the date of closing at the daily
rate of 0.015%) in January 1999, 2000, and 2001. The affiliates who purchased
the working interests from Aspen paid their entire purchase price prior to the
closing.
The Johnson Unit in Tehama County, California, consists of 660 acres
including 3 wells producing natural gas from the Tehama, Kione, and Forbes
formations at the rate of 250 thousand cubic feet per day (Mcf/D). Based on an
engineering estimate prepared by Aspen's staff, the net reserves attributable to
Aspen's remaining 21% interest in the Johnson Unit are 205,000 Mcf as of June
30, 1998.
The Gay Unit in Glenn County, California, consists of 615 acres including 3
wells producing natural gas from the Kione and Forbes formations at the rate of
70 Mcf/D. Based on an engineering estimate prepared by Aspen's staff, the net
reserves attributable to Aspen's remaining 21% interest in the Gay Unit are
86,000 Mcf as of June 30, 1998.
Prior to the closing, Aspen structured the terms of the acquisition with
the other working interest participants. At the closing, Aspen delivered an
aggregate 79% working interest (60.83% net revenue interest) to the other
working interest participants and retained a 21% working interest (16.17% net
revenue interest in the Johnson and Gay Units, in addition to a 5.00% royalty
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interest in the Gay Unit) itself. Prior to the reassignment by Aspen to the
other working interest owners, Aspen assigned a royalty interest to the Aspen
employees pursuant to the terms of Aspen's Amended Royalty and Working Interest
Plan.
Aspen believes several of the wells located on the Johnson and Gay Units
may have gas potential in zones behind-pipe. These zones will be perforated in
the future and may lead to increased gas production. Aspen also plans to shoot a
3-D seismic survey over the properties which could identify additional drilling
locations.
As noted, the future conduct of the business of Aspen as well as the future
production from the Johnson and Gay Units described herein are dependent upon a
number of factors, 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 the
Company'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 an 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 it is important that each person reviewing this report
understand the significant risks attendant to the operations of Aspen. Aspen
disclaims any obligation to update any forward-looking statement made herein.
Item 7: Exhibits
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(a) Financial Statements of Businesses Acquired and (b) Pro forma financial
information
Although the acquisition of the assets described in Item 5 constituted more
than 10% of Aspen's assets on a consolidated basis, the net acquisition (being a
21% working interest (16.17% net revenue interest in the Johnson and Gay Units,
in addition to a 5.00% royalty interest in the Gay Unit)) constitutes less than
10% of Aspen's assets on a consolidated basis. Consequently, Aspen does not
believe that financial statements or pro forma financial information for this
acquisition or the subsequent disposition are required, and Aspen has requested
confirmation from the staff of the Securities and Exchange Commission to that
effect. If the staff does not concur and financial statements or pro forma
financial information are required, they will be filed in accordance with the
staff's requirements.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ASPEN EXPLORATION CORPORATION
July 31, 1998 By: /s/ R. V. Bailey
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R.V. Bailey, President
