Aspen Group Resources Corporation
TSX : ASR

Aspen Group Resources Corporation

November 15, 2005 08:30 ET

Aspen Group Reports Improved Third Quarter Results

CALGARY, ALBERTA--(CCNMatthews - Nov. 15, 2005) - Aspen Group Resources Corporation (TSX:ASR) ("Aspen" or the "Company"), today reported its financial results for the three and nine-month period ended September 30, 2005. Due to the sale of virtually all of its US oil and gas producing assets in October of 2004, for comparative purposes Aspen reports its financial results on a continuing operations basis. Aspen reports its results in US dollars.

For the three-month period ended September 30, 2005, Aspen reported revenues from continuing operations of $1.15 million compared to $893 thousand recorded in the same period last year. For the period, Aspen reported a net loss from continuing operations of $897 thousand or $0.01 per share versus a net loss from continuing operations of $1.45 million or $0.02 per share in 2004. Net loss, including discontinued operations, was $16 million or $0.26 per share in 2004. The net loss in 2004 relates to the aforementioned sale of virtually all the Company's US oil and gas producing assets.

For the nine-month period ended September 30, 2005, Aspen reported revenues from continuing operations of $2.69 million compared to $2.72 million recorded in the same period last year. For the period, Aspen reported a net loss from continuing operations of $2.63 million or $0.04 per share versus a net loss from continuing operations of $3.14 million or $0.06 per share in 2004. Net loss, including discontinued operations, was $16.99 million or $0.31 per share in 2004.

Results for the three and nine-month period were positively impacted by higher average commodity prices. Offsetting these were reduced contributions from Aspen's wholly owned subsidiary, United Cementing and Acidizing, Inc., which reported a 25 percent decrease in revenue in the quarter and the nine-month period.

Average production for the three months ended September 30, 2005 averaged 288 BOE (barrel of oil equivalent, 6:1 conversion) per day compared to 329 BOE per day during the same period last year. Although production declined year over year, third quarter production increased by 14 percent from the second quarter of 2005 due to new production from wells in Butte Saskatchewan, drilled in during the winter of 2004-05, and put into production during the quarter. The production mix in the third quarter of 2005 was 58 percent gas and 42 percent oil Aspen's production totals as at September 30, 2005 do not include production from the wells recently completed in the Daly Field in Manitoba.

General and administrative (G&A) expenses increased approximately 25 percent to $1,249,143 during the three months ended September 30, 2005 and by 54 percent to $2.67 million in the nine-month period. The increase relates to several factors including a one-time charge for an out of court settlement in regards to the Duke Energy Trading and Marketing L.L.C. (Duke) lawsuit, one-time severance charges, and additional legal costs related to ongoing litigation. Excluding one-time charges and legal costs, G&A decreased by 17 percent in the quarter and by 5 percent in the nine -month period.

"The combination of our continued operational improvement and our success in Manitoba has positioned Aspen for continued improvement in the fourth quarter and significantly improved results in 2006," stated Robert Calentine, CEO of Aspen. "We are making significant progress in reducing our legal exposure, most recently with the settlement of the Duke law suit. We continue to reduce debt and corporate costs. With the new wells in Manitoba coming on line within the next 30 days, we anticipate exiting 2005 with production approaching 400 BOE per day. In early 2006, we expect to initiate an extensive drilling program to further develop our acreage in Manitoba. The program will significantly increase our production and cash flow, as well as provide a strong foundation for the future growth of Aspen."

In the third quarter, the Company drilled three horizontal wells in the Daly Field in Manitoba. Each well encountered four potential productive zones in the Lodgepole and Bakken formations. Construction and tie-in of the temporary surface gathering facilities for the two productive wells (the 16-10 and the (2) 16-10), consisting of two production tanks per well, have been completed the wells were put into production using tubing pumps at a nominal cumulative rate of approximately 80-100 barrels of oil per day (bopd) and monitored to determine optimum pump size. Aspen's engineers are currently working to properly size the pumps to handle the high water volumes that are typical in the Daly field and increase production rates to a higher stabilized output level. During the monitoring process, production from the wells is being sold at Cromer referenced pricing (September 2005 price of Cnd.$75.05/bbl).

As at September 30, 2005, Aspen had working capital of $166 thousand compared to working capital of $3.84 million at 2004 year end. The change in working capital was due to the oil and gas drilling activity in 2005. Aspen currently has long term debt of approximately $136 thousand, bank debt of $104 thousand, and proven reserves (excluding Manitoba) of $7.6 million.

Comparative summary results for the three and nine-month period ended September 30, 2005 are shown in US Dollars in the following tables:



Consolidated Summary Balance Sheet as at
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(In US Dollars)
---------------------------------------------------------------------
Sept. 30, 2005 Dec. 31, 2004
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(unaudited) (audited)
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Assets
---------------------------------------------------------------------
Cash and Current assets $ 3,292,383 $ 7,878,635
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Proved oil and gas properties
(net of depletion) 7,595,701 5,085,989
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Property, equipment and other
assets (net of depreciation) 705,937 812,444
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Total Assets $ 11,594,021 $ 13,777,068
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Liabilities and Stockholders' Equity
---------------------------------------------------------------------
Current Liabilities $ 3,126,133 $ 4,040,353
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Long-term debt,
net of current maturities 136,653 215,868
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Asset Retirement Obligation 585,059 563,236
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Stockholders' Equity 7,746,176 8,957,611
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Total Liabilities and
Stockholders' Equity $ 11,594,021 $ 13,777,068
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Consolidated Summary Statements of Operations
---------------------------------------------
(In US Dollars)
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For the 3-month period ended For the 9-month period ended
------------------------------------------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2005 2004 2005 2004
------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
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Continuing
Operations
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Revenue $ 1,152,018 $ 892,786 $ 2,689,490 $ 2,724,200
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Expenses 2,041,506 2,128,960 5,281,880 5,353,691
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Loss from
Continuing
Operations 889,488 1,236,174 2,592,390 2,629,491
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Other expense 7,491 215,811 33,158 507,477
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Net loss from
continuing
operations 896,979 1,451,985 2,625,548 3,136,968
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Discontinued
Operations
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Revenue from
divested
assets $ - $ - $ - $ 2,376,545
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Expenses from
divested assets - - - 1,676,018
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Loss from
disposal of US
oil and gas
production
activities - 14,554,381 - 14,554,381
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Total
Discontinued
operations - 14,554,381 - 13,853,854
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Net Loss 896,979 16,006,366 2,625,548 16,990,822
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---------------------------------------------------------------------
Loss per share
from Continuing
Operations $ 0.01 $ 0.02 $ 0.04 $ 0.06
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Net loss
per share $ 0.01 $ 0.26 $ 0.04 $ 0.31
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Weighted
average number
of shares 75,763,307 62,039,901 74,335,896 55,365,150
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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 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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