Alberta Oilsands Inc. announces oil sands reserves of 68 million barrels at
Clearwater West

/NOT FOR DISTRIBUTION IN THE U.S./

CALGARY, May 20 /CNW/ - Alberta Oilsands Inc. ("AOS" or the "Company") (AOS - TSX-V) is pleased to announce that it has achieved the next milestone towards commercial production of its Clearwater property. The Company's first reserves assignment is for its Clearwater West Phase 1 Project area. A third party evaluation by Ryder Scott Company Canada Petroleum Consultants ("Ryder Scott"), with an effective date of March 31, 2010, assigned 16.3 million barrels of Probable ("2P") and 51.3 million barrels of Possible bitumen reserves on approximately one section of the Company's 100% working interest lands southeast of the City of Fort McMurray. Total gross lease probable plus possible ("3P") reserves of 67.6 million barrels (MMB) of bitumen have been assigned by Ryder Scott.

On January 15, 2010 Alberta Oilsands filed a pilot project application with a design production capacity of 715 m3/day (4,500 barrels per day ("bpd")) of bitumen. The application contemplates six (6) horizontal well pairs to be drilled on the Clearwater West Phase 1 project. AOS' Clearwater property comprises a total of 28 sections of contiguous oil sands rights just south east of the City of Fort McMurray and is accessible via paved Highway 69. The Clearwater West project area consists of two and one half (2.5) sections: Sec 21, 22 and portion of 27 and 28 of Twp 088 R08 W4M. The total reserve assignment area covers approximately one section area within the 2.5 sections of the Clearwater West Project. Initial phase surface facilities are planned to be located in the southeast quarter of section 21.

The following table summarizes Ryder Scott's estimate of the Company's reserves within the Clearwater West Phase 1 Project area:

    
    -------------------------------------------------------------------------
                              100% W.I.   Realized
                                Lease     Bitumen       BFIT
                             Reserves(3)  Price(4)   NPV10(5)(6)    NPV10(7)
    Reserve Category            (MMB)     (C$/bbl)  (C$ Millions)  Per share
    -------------------------------------------------------------------------
    Probable Undeveloped(1)     16.3       54.65       $70.7         $0.67
    -------------------------------------------------------------------------
    Total Proved +
     Probable (2P)(1)           16.3       54.65       $70.7         $0.67
    -------------------------------------------------------------------------
    Possible Undeveloped(2)     51.3       54.65       $97.3         $0.92
    -------------------------------------------------------------------------
    Total Proved + Probable +
     Possible (3P)              67.6       54.65      $168.0         $1.60
    -------------------------------------------------------------------------

    (1) Probable reserves are those additional gross reserves that are less
        certain to be recovered than proved reserves. It is equally likely
        that the actual remaining quantities recovered will be greater or
        less than the sum of the estimated Proved plus Probable reserves.
    (2) Possible reserves are those additional gross reserves that are less
        certain to be recovered than probable reserves. There is a 10%
        probability that the quantities actually recovered will equal or
        exceed the sum of proved plus probable plus possible reserves.
    (3) Lease reserves are volumes before deductions for capital costs,
        operating costs, royalties and encumbrances.
    (4) Realized bitumen price is the representative price over the project
        life.
    (5) Future net revenues associated with reserves and resources do not
        necessarily represent fair market value.
    (6) The BFIT NPV(10) are before deduction for income taxes and include
        deductions for royalties and the 2% GORR granted to the Fort McMurray
        Airport Authority.
    (7) Based on 105.3 million shares outstanding
    

The Ryder Scott reserve report was prepared in accordance with National Instrument 51-101 ("NI 51-101") using the assumptions and methodology outlined in the Canadian Oil and Gas Evaluation Handbook ("COGEH"). Under the COGEH guidelines, the AOS Clearwater West Phase 1 Project has achieved important milestones, including the submission of a project application to the Energy Resources Conservation Board and Alberta Environment on January 15, 2010. For a copy of the application, visit the Corporation's website at www.aboilsands.ca. As a result of the submission of the application, the estimated contingent resources within the Phase 1 project area has been reclassified as proved plus probable (2P) reserves. Surrounding contingent resource areas with greatest expectations of future development to maintain plant capacity have been reclassified as possible reserves. Proved (1P) reserves may be assigned for the Phase 1 area in the future when regulatory approval is granted and project funding and construction commitments are secured.

Future development plans in the Clearwater West area are to realize a larger production project, conceptually upwards of 10,000 bpd to 15,000 bpd (including the Phase 1 Project production) to recover the balance of the contingent resources that remains in this category after the current reserve assignment. That remaining volume is estimated at approximately 104 million barrels. This expanded development plan will require additional capital to increase the number of production pads, plant and facilities. Ryder Scott has completed scoping studies on the economic viability of indicative bitumen projects at various production levels, summarized below.

The following table summarizes the before income tax net present value (BFIT NPV10) estimates calculated by Ryder Scott for the Clearwater West property for various production and bitumen pricing scenarios and capital cost estimates for commercial scale developments:

    
    -------------------------------------------------------------------------
                             100% WI     Realized
    Production                Gross       Bitumen       BFIT         BFIT
    Capacity     PIIP(1)     Bitumen       Price       NPV(10)      NPV(10)
      (bpd)       (MMB)    Volume (MMB)  (C$/bbl)  (C$ Millions)  (Per share)
    -------------------------------------------------------------------------
     10,000        220         110         63.0         395          3.75
    -------------------------------------------------------------------------
     15,000        320         160         63.0         547          5.19
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
     10,000        220         110         80.0         635          6.03
    -------------------------------------------------------------------------
     15,000        320         160         80.0         885          8.41
    -------------------------------------------------------------------------

    * Notes: Economic calculations performed by Ryder Scott for indicative
    in situ projects, effective February 1, 2010. Major assumptions: Project
    start-up 2012, 50% recovery factor, realized prices of C$63.00/bbl and
    C$80.00/bbl are derived from an assumed US$77.00/bbl WTI and US$95.00/bbl
    WTI respectively, adjusted for foreign exchange, quality differentials,
    diluent and transportation costs assumptions. Gross Bitumen Volume is raw
    bitumen production for project life. Capital costs assumptions:
    C$215 million for the 10,000 bpd case and C$320MM for the 15,000 bpd
    case. Operating cost of $30/bbl for all cases. Assumptions were provided
    by AOS which were considered reasonable and therefore accepted by Ryder
    Scott. NPV10's include deduction for a 2%GORR to the FMAA. The estimated
    NPV10s presented may not represent fair market value.

    (1) Petroleum initially in place (PIIP) means that the quantity of
        petroleum that is estimated to be contained in known accumulations
        prior to production. A recovery project cannot be defined for this
        volume of discovered petroleum initially in place at this time. There
        is no certainty that it will be commercially viable to produce any
        portion of the resources.
    

The net present value figures shown in the table above were calculated based on various assumptions provided to Ryder Scott by AOS. Production profiles and recovery factors are analogous to certain areas of the Suncor MacKay River Project, which is a SAGD project with a reservoir similar in depth and characteristics to AOS' Clearwater West project.

Shabir Premji, Executive Chairman, commented, "The independent reserve bookings mark a significant milestone for AOS. The assignment of probable reserves brings further certainty to the value of the Clearwater property and provides the Company an updated borrowing base that enhances the Company's ability to obtain project financing and advance alliance and joint venture partnership discussions."

The Company owns a sizeable portfolio of undrilled oil sands lands that holds the potential of additional contingent resources once they are drilled. Plans are in place to delineate and develop these properties in an orderly manner with prudent expenditure profiles. The table below is an indicative summary of the estimates of Undiscovered, Discovered, and Contingent Resources previously evaluated on these properties.

    
    -------------------------------------------------------------------------
    Alberta Oilsands Inc. Summary of Net Resources Estimated By Ryder Scott
                                   (MMBbl)

    -------------------------------------------------------------------------
                      Undiscovered(1)    Discovered(2)    Contingent(3)
    -------------------------------------------------------------------------
    Clearwater             401(4)           2,019(4)          351(7)
    Algar Lake             807(5)           -                 -
    Hangingstone East      575(6)           -                 -
    Grand Rapids           -                -                 -

    Total                  1,783            2,019             351
    -------------------------------------------------------------------------

    (1) The Undiscovered volumes reported represents resource potential
        identified by 3 separate Ryder Scott reports prepared since December
        2006 and there has been no updated assessment of these estimates (see
        items 4, 5 and 6 below). The volumes stated are an indication of
        bitumen-in-place only. There is no certainty that any portion of the
        resources will be discovered. If discovered, there is no certainty
        that it will be commercially viable.
    (2) Discovered resources not recognized as Contingent are classified as
        Unrecoverable. There has been no updated assessment of this category
        since the initial assessment in October 2007, effective Oct. 1, 2007.
        The volumes stated are an indication of bitumen-in-place only. A
        portion of this volume has since been re-classified to contingent
        resources in 2007. Subsequently, a portion of the contingent
        resources have been updated to probable and possible reserves. There
        is no certainty that it will be commercially viable to produce any
        portion of the resources.
    (3) Contingent resource volumes are best estimate (P50). Ryder Scott
        resources assessment in October 2007, effective Oct. 1, 2007. These
        volumes are recoverable volumes and a 50% recovery factor has been
        used. There has been no updated assessment of this category since the
        initial assessment. A portion of this volume has since been re-
        classified to contingent resources in 2007. Subsequently, a portion
        of the contingent resources have been updated to probable and
        possible reserves. There is no certainty that it will be commercially
        viable to produce these resources.
    (4) Ryder Scott resources assessment in October 2007, effective Oct. 1,
        2007.
    (5) Ryder Scott resources assessment (Hangingstone West) in October 2007,
        effective Oct. 1, 2007.
    (6) Ryder Scott resources assessment in May 2007, effective December 1,
        2006. Estimate based on 50% WI in AOS' 23 sections prior to pooling.
        No value assigned to the pre-pooled 15.5 sections contributed from
        the JV partner. A resource assessment update on the pooled property
        is scheduled for mid-year 2010.
    (7) Ryder Scott's estimate with the effective date of June 1, 2009
        (Clearwater West) and June 1, 2008 (Clearwater East and North). A
        portion of the contingent resources from Clearwater West have been
        re-categorized into probable and possible reserves.
    

In Hangingstone East project area, where AOS has a 50% interest in the 38.5 sections, thirteen 13 gross wells (6.5 net) were drilled in the past 2010 winter program with its joint venture partner. A mid-year 2010 resource assessment update is expected with the new well results, in June or July of 2010. Since the joint venture property is operated by its partner, the resources assessment will be performed by the third party evaluator used by AOS' joint venture partner rather than Ryder Scott. AOS is currently planning a drilling program that will include Phase 1 production wells at Clearwater West and delineation drilling on its other properties to further define additional Contingent Resources.

Definitions

"bbl"means Barrel, a unit of oilfield volume measurement equivalent to 0.1598 m(3) or 42 U.S. gallons.

"Contingent Resources" means those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingencies may include factors such as economic, legal, environmental, political, and regulatory matters or a lack of markets. It is also appropriate to classify as contingent resources the estimated discovered recoverable quantities associated with a project in the early evaluation stage.

"Discovered Petroleum Initially-in-Place" or "Discovered PIIP" or "Discovered Resources" means that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of discovered petroleum initially-in-place includes production, reserves and contingent resources; the remainder is unrecoverable.

"Probable reserves" means those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated Proved plus Probable reserves.

"Possible reserves" means those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated Proved plus Probable plus Possible reserves.

"Proved reserves" means those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated Proved reserves.

Forward-Looking Statements and Information: This press release contains certain forward-looking statements and information ("forward-looking statements") within the meaning of such statements under applicable securities law including management's assessment of the Company's properties, production and prospects. Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "design", "predict", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. In particular, this news release contains forward-looking statements and information with respect to: (i) the ability of the Company to receive the necessary regulatory approvals in respect of its Clearwater West LPSAGD Pilot application in a timely manner, or at all; (ii) the ability of the Company to raise the necessary funds to proceed with the development of its Clearwater West LPSAGD Pilot; and (iii) the results and timing of development in respect of the Company's Clearwater West LPSAGD Pilot (including in respect of estimated design capacities and simulated production numbers). These statements are only predictions. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of oil sands and properties, the uncertainties involved in interpreting drilling results and other geological data, uncertainties relating to the ability of the Company to receive the necessary regulatory approvals in respect of its Clearwater West LPSAGD Pilot application, uncertainties relating to the technologies associated with the Clearwater West LPSAGD Pilot and whether the results of the Clearwater West LPSAGD Pilot will meet designed capacities and simulated production numbers once operational, fluctuating oil and gas prices, the possibility of cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed to fund the Clearwater West LPSAGD Pilot, the possibility that royalties and other government levies could be increased, and other factors including unforeseen delays. As an oil sands focused enterprise, the Company faces risks, including those associated with exploration, development, regulatory approvals, fluctuations in commodity demand and commodity prices and the ability to access sufficient capital from external sources. Anticipated exploration and development plans relating to the Company's properties are subject to change. For a detailed description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company's annual financial statements and management discussion and analysis for the year ended December 31, 2009, which are available at www.sedar.com. The Company undertakes no obligation to update such forward-looking statements or information if circumstances or management's estimates or opinions should change, unless required by law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

%SEDAR: 00020297E

SOURCE ALBERTA OILSANDS INC.

For further information: For further information: Shabir Premji, Executive Chairman, (403) 232-3341, spremji@aboilsands.ca; Chad Dust, Executive V.P. Business Development and Finance, (403) 538-3191, cdust@aboilsands.ca; Or visit our website at www.aboilsands.ca

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ALBERTA OILSANDS INC.

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