Aspen Group Resources Corporation
TSX : ASR

Aspen Group Resources Corporation

May 16, 2006 09:20 ET

Aspen Group Reports Improved First Quarter 2006 Results And Updates Daly Field Operations

CALGARY, ALBERTA--(CCNMatthews - May 16, 2006) - Aspen Group Resources Corporation (TSX:ASR)("Aspen" or the "Company"), today reported its financial results for the quarter ended March 31, 2006. Aspen reports results in US dollars.

For the quarter ended March 31, 2006, Aspen reported a net loss of $0.56 million or $0.01 per share versus a net loss from continuing operations of $0.95 million or $0.01 per share in 2005. Aspen generated gross revenues of $1.12 million in the quarter compared to $0.72 million for the same period in 2005. The year over year increase in revenue and improved net income are primarily due to higher sustained commodity prices during the quarter ended March 31, 2005. Net production in the period averaged 262 boe/d (barrel of oil equivalent/day, 6:1 conversion) as compared to 275 boe/d in the same period in 2005.

In the first quarter of 2006, general and administrative expenses were $0.65 million, compared to $0.59 million in the same period in 2005. As at March 31, 2006, Aspen reported a working capital deficit of $0.22 million and cash and restricted cash totaling $1.064 million.

Subsequent to the end of the quarter, Aspen completed the sale of two non-core producing assets in separate transactions, for total gross proceeds of $2.1 million. Aspen also renewed a $0.9 million bank line secured by existing assets. Proceeds from the transaction, the bank line and existing cash flow will be used to fund drilling in the Daly Field.

"We are encouraged by the initial results of our drilling program in Manitoba. The large block of acreage with its multiple drilling sites coupled with several different zones provides us with a long term sustainable drilling program," stated Robert Calentine, CEO of Aspen. "We are currently focusing on developing the infrastructure to efficiently lower our cost as we bring the production on line."

Daly Field Operations

Aspen announced that it has completed drilling the first two horizontal wells of its Phase II drilling program in the Daly Field in Manitoba. The 8-14 well was drilled to a vertical depth of 853 meters. The well was plugged back and kicked off into the target zone and drilled horizontally approximately 1,150 meters encountering good oil shows and formation porosity. The 1-14 well keyed off of an existing log and drilled into the horizontal target 200m east of the surface location and continued for another 1,400 meters. That well also encountered hydrocarbon saturation and porosity indicative of a highly productive formation. The total measured depth of the 8-14 is 1,866 meters and the 1-4 is 2,262 meters. The wells have been secured until completion can commence. The permits necessary to move the completion rig on location will be issued on June 1.

The Company is currently moving the rig to the third location and expects to spud immediately.

"We are extremely pleased with the initial results from Phase II drilling", stated Ron Mercer, VP of operations for Aspen. "The hydrocarbon shows in the horizontal arms of both wells were as anticipated and we expect to complete the first three wells during the first part of June."

Comparative summary results for the three-month period ended March 31, 2006 are shown in US Dollars in the following tables:



Consolidated Summary Balance Sheet as at
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(In US Dollars)
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Mar. 31, Dec. 31,
2006 2005
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(unaudited) (audited)
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Assets
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Cash and Current assets $ 3,195,845 $ 3,712,630
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Proved oil and gas properties (net of
depletion) 6,748,876 6,679,977
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Property, equipment and other assets
(net of depreciation) 663,169 699,921
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Total Assets $ 10,607,890 $ 11,092,528
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Liabilities and Stockholders' Equity
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Accounts payable, net liabilities from
discontinued operations, notes payable $ 3,379,555 $ 3,312,830
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Current maturities of long-term debt 31,766 31,770
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Total Current Liabilities 3,411,321 3,344,600
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Long-term debt, net of current maturities 218,063 225,131
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Asset Retirement Obligations 872,907 866,749
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Stockholders' Equity 6,105,599 6,656,048
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Total Liabilities and Stockholders' Equity $ 10,607,890 $ 11,092,528
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Consolidated Summary Statements of Operations
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(In US Dollars)
For the period ended
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Mar. 31, Mar. 31,
2006 2005
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(unaudited) (audited)
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Continuing Operations
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Revenue $ 1,123,236 $ 723,919
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Expenses 1,673,285 1,659,842
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Loss from Continuing Operations (550,049) (935,923)
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Other income (expense) (5,419) (14,822)
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Net loss from continuing operations (555,468) (950,745)
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Net loss per share $ (0.01) $ (0.01)
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Weighted average number of shares 74,763,037 73,250,567
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Total shares outstanding 74,763,037 74,763,037
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For complete financial statements, please refer to the Company's filings with SEDAR at www.sedar.com

Aspen Group Resources Corporation is an independent oil and natural gas producer engaged in the acquisition, exploration, production and development of oil and natural gas properties in North America. Aspen's shares trade on the Toronto Stock Exchange under the symbol "ASR".

Portions of this document include "forward-looking statements", which may be understood as any statement other than a statement of historical fact. These statements are based on managements' current expectations and are subject to uncertainty and changes in circumstances. Forward-looking statements may include, but are not limited to, statements concerning estimates of recoverable hydrocarbons, expected hydrocarbon prices, expected costs, statements relating to the continued advancement of the Joint Venture's projects and other statements which are not historical facts. When used in this document, and in other published information of Westchester and Aspen, the words such as "could," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are indicative of a forward-looking statement. Although Westchester and Aspen believe that their expectations reflected in the forward-looking statements are reasonable, the potential results suggested by such statements involve risk and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Forward-looking statements contained in this document are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Certain factors that can affect Westchester's and Aspen's ability to achieve projected results are described in Aspen's Annual Report and Form 20-F, and other reports filed by both companies with the applicable Canadian securities regulatory authorities and by Aspen with the US Securities and Exchange Commission. Factors that can affect the ability of Aspen and Westchester to achieve projected results include, among others, production variances from expectations, uncertainties about estimates of reserves, volatility of oil and gas prices, the need to develop and replace reserves, the substantial capital expenditures required to fund operations, environmental risks, drilling and operating risks, risks related to exploratory and developmental drilling, competition, government regulation, the ability of Aspen and Westchester to implement its business strategy, the potential that projects will experience technical and mechanical problems, geological conditions in the reservoir which may negatively impact levels of oil and gas production and changes in product prices and other risks not anticipated by the Joint Venture or disclosed in published material of Westchester or Aspen. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties.

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