Aspen Group Resources Corporation
TSX : ASR

Aspen Group Resources Corporation

August 16, 2005 16:30 ET

Aspen Group Reports 2005 Second Quarter and Six-Month Results

CALGARY, ALBERTA--(CCNMatthews - Aug. 16, 2005) - Aspen Group Resources Corporation (TSX:ASR) (Aspen), today reported its financial results for the three and six-month period ended June 30, 2005. Due to the sale of virtually all of its U.S. oil and gas producing assets in October 2004, for comparative purposes Aspen reports its financial results on a continuing operations basis. Aspen reports its results in US dollars.

For the six-month period ended June 30, 2005, Aspen reported revenues from continuing operations of $1.54 million compared to $1.83 million recorded in the same period last year. For the period, Aspen reported a net loss from continuing operations of $1.73 million or $0.02 per share versus a net loss from continuing operations of $1.68 million or $0.03 per share in 2004. Net loss, including discontinued operations, was $984 thousand or $0.02 per share in 2004.

For the three-month period ended June 30, 2005, Aspen reported revenues from continuing operations of $814 thousand compared to $930 thousand recorded in the same period last year. For the period, Aspen reported a net loss from continuing operations of $767 thousand or $0.01 per share versus a net loss from continuing operations of $950 thousand or $0.02 per share in 2004. Net loss, including discontinued operations, was $753 thousand or $0.01 per share in 2004.

Results for the three and six-month period were negatively impacted by several factors including reduced production from its Western Canadian properties. Net production in the first half of 2005 averaged 258 boe/d (barrel of oil equivalent/day, 6:1 conversion) as compared to 329 boe/d in the same period in 2004. The year-over-year decrease in production is primarily due to natural production declines. Aspen is currently participating in a drilling program in the Daly Field in Manitoba, which if successful, is expected to increase current production levels. Results were also affected by reduced contributions from Aspen's wholly owned subsidiary, United Cementing and Acidizing, Inc., which reported a 37 percent decrease in revenue in the first half of 2005.

For the six-month period ended June 30, 2005, general and administrative expenses increased slightly to $1.43 million, from $1.35 million in the same period in 2004. The increase was primarily due to additional costs associated with the Company's on-going litigation. Oil and gas production expense decreased from $536 thousand in 2004 to $517 thousand in the first half of 2005.

Cash flow from operations (before changes in working capital) declined from $810 thousand or $0.02 per share in six-month period ended June 30, 2004 compared to a use of cash of $712 thousand or ($0.01) per share in the same period in 2005. The decline in cash flow is attributable to the aforementioned increased costs and lower production levels. In addition, costs associated with exploration drilling increased significantly in 2005 as compared to the same period in 2004.

As at June 30, 2005, Aspen reported working capital of $2.35 million and cash totalling $2.8 million.

Comparative summary results for the three and six-month period ended June 30, 2005 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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June 30, 2005 Dec. 31, 2004
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(unaudited) (audited)
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Assets
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Cash and Current assets $ 5,139,046 $ 7,878,635
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Proved oil and gas properties
(net of depletion) 6,297,052 5,085,989
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-
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Property, equipment and other
assets (net of depreciation) 653,666 754,279
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Total Assets $ 12,182,726 $ 13,777,068
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Liabilities and Stockholders' Equity
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Current liabilities $ 2,793,997 $ 4,040,353
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Long-term debt, net of
current maturities 162,744 215,868
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Asset retirement obligation 577,568 563,236
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Stockholders' Equity 8,648,417 8,957,611
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Total Liabilities and
Stockholders' Equity $ 12,182,726 $ 13,777,068
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Consolidated Summary Statements of Operations
---------------------------------------------
(In US Dollars)
For the period ended
---------------------------------------------------------------------
For the 3-month period ended For the 6-month period ended
June 30, 2005 June 30, 2004 June 30, 2005 June 30, 2004
(unaudited) (unaudited) (unaudited) (unaudited)
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Continuing
Operations
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Revenue $ 813,553 $ 930,422 $ 1,537,472 $ 1,831,414
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Expenses 1,580,532 1,778,515 3,240,374 3,224,731
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Loss from
Continuing
Operations (766,979) (848,093) (1,702,902) (1,393,317)
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Interest
expense (10,845) (101,698) (25,667) (291,666)
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Net loss from
continuing
operations (777,824) (949,791) (1,728,569) (1,684,983)
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Discontinued
Operations
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Revenue from
divested
assets $ - $ 784,982 $ - $ 2,376,545
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Expenses
from
divested
assets - (588,488) - (1,676,018)
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Total
Discontinued
operations - 196,494 - 700,527
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Net Loss (777,824) (753,297) (1,728,569) (984,456)
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Loss per
share from
Continuing
Operations $ (0.010) $ (0.016) $ (0.023) $ (0.032)
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Net loss
per share $ (0.010) $ (0.013) $ (0.023) $ (0.018)
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Weighted
average
number of
shares 75,762,807 58,303,134 74,213,947 53,374,946
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Total shares
outstanding 75,762,807 61,948,870 75,762,807 61,948,870
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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 Aspen's projects and other statements which are not historical facts. When used in this document, and in other published information of Aspen's, the words such as "could," "estimate," "expect," "intend," "may," "potential," "should," and similar expressions are indicative of a forward-looking statement. Although 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 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 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 or disclosed in published material by Aspen. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties.

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