Alberta Oilsands Inc. Announces Second Quarter Results and Operations Update

    THE U.S./

    CALGARY, Aug. 29 /CNW/ - Alberta Oilsands Inc. (the "Company" or "AOS")
(TSXV: AOS) is pleased to announce the financial highlights for the three and
six months ended June 30, 2008.


    The Company made significant progress since the beginning of the year in
the execution of its strategic goals and operations. Specifically the Company
identified what it believes to be two 10,000 barrel per day projects on its
Ft. McMurray - Clearwater project area of the Athabasca oil sands. In pursuit
of these goals, the Company achieved the following:

    -  Completed a successful 2007/2008 winter delineation drilling program
       comprising 34 core holes.
    -  Completed an 83 km 2D seismic exploration program.
    -  Raised an additional $23.6 million in the first and third quarters of
       2008 to strengthen its balance sheet.
    -  Entered into a pooling agreement in Hangingstone East to increase its
       gross acreage in that area to 38.5 sections.
    -  Obtained an independent resource assessment from Ryder Scott Company
       Canada, Petroleum Consultants ("Ryder Scott"), an independent
       petroleum consulting firm, with an effective date of June 1, 2008 that
       provided a contingent (recoverable) resource increase of 119 million
       barrels (a 59% increase) to an aggregate of 320 million barrels of
       contingent resources compared to the 2007 assessment.
    -  Obtained a preliminary scoping engineering study of the Clearwater
    -  Obtained a scoping valuation from Ryder Scott of its Clearwater
       projects that indicated an unrisked total before income tax NPV10%
       valuation of $750 million as detailed in the Company's July 10, 2008
       news release.
    -  Has $21.5 million of cash in hand after proceeds from its August 2008

    The above activities have positioned the Company to target a start to the
construction of a pilot project in the Clearwater lands for the first half of
2010 and the commencement of commercial production in 2012. An engineering
scoping cost estimate and timing study (pre-design basis memorandum or
"pre-DBM") was completed in June 2008. A third party scoping NPV valuation
study was completed in July indicating that a 10,000 bpd development based on
the resource levels is expected to be economic. Environmental and further
process design studies have been initiated to target for a pilot project
application submission by the end of 2008, as initial steps towards realizing
the Company's production goals.

    There is no certainty that it will be commercially viable to produce any
portion of the resources described in this news release. For important
information regarding the disclosure of resource estimates and our independent
resource and NPV assessments, including the definitions of "Contingent
Resources", please see the section entitled "Disclosure of Resources" below in
this news release. For a discussion of the assumptions made and risks
associated with the development of our oil sands project, please also see the
discussion under the heading "Disclosure of Resources" as well as under the
heading "Forward-looking Statements and Information" in this news release.

    Second Quarter Operating Highlights

    The following tables outline certain highlights of our financial and
operating results for the three and six months ended June 30, 2008:

                        Three months ended June 30  Six months ended June 30
    Results                      2008         2007         2008         2007
    Petroleum and natural
     gas sales                555,333      487,642      999,669    2,006,998
    Funds used in
     operations              (631,341)    (703,819)    (898,589)     (98,487)
    Loss for the period    (1,169,247)  (1,378,661)  (1,949,681)     (63,121)
    Capital expenditures    1,805,135    4,112,925    7,698,146    7,882,007

                        Three months ended June 30  Six months ended June 30
    Production                   2008         2007         2008         2007
    Oil and NGL (bbls/day)         47           75           48          166
    Natural gas (mcf/day)          41           34           44           43
    boe(1)/day (6:1)               54           80           56          173

                        Three months ended June 30  Six months ended June 30
    Commodity Prices             2008         2007         2008         2007
    Oil and NGL ($/bbl)        120.12        68.16       105.71        65.00
    Natural gas ($/mcf)         10.17         7.92         8.91         7.20
    boe(1) ($/boe)             112.62        66.69        98.84        64.09

    (1) See "BOE Presentation" below.


    The Company raised $15.5 million in August 2008 to augment its working
capital position and fund the 2008 fall drilling and the 2008/2009 winter
drilling programs. The Company continues to maintain a strong balance sheet.
With the $15.5 million equity financing in August 2008 and a focused fall
drilling program designed to provide the maximum value for the capital
expended the Company expects to exit the third quarter of 2008 with
approximately $20.0 million cash and no debt. The Company believes this will
allow it to undertake the appropriate environmental studies to progress
towards a pilot project application before the end of 2008 followed by a
2008/2009 core drilling program.
    The fall 2008 drilling program is expected to comprise approximately 10
wells in Clearwater West and is budgeted for approximately $3.0 million. This
program is expected to provide additional data to enable us to file the
application for project development by year end. Services are currently being
contracted for this program.
    The Company's objectives for the rest of 2008 are to pursue the goal of
bringing our potential Clearwater projects to production and to advance our
Hangingstone project with our new partner, an established oil sands area
producer. Winter program planning is well underway and services are expected
to be contracted in the near future.
    The Company expects its 2009 preliminary capital budget to be in the
range of $20 million and will continue to research and evaluate multiple
approaches to find the best means to financing its future capital
expenditures. The Company's preference is to proceed with the projects on a
100% working interest basis, provided the capital markets recognize the
underlying value of the assets and facilitate the raising of the required
capital at non-dilutive levels. Alternatively, the Company may seek industry
or financial partners, which would reduce its working interest in the
projects, but mitigate the Company's financial market risk.
    The Company will file its second quarter management's discussion and
analysis and interim unaudited consolidated financial statements and notes
thereto as at and for the three and six months ended June 30, 2008 in
accordance with National Instrument 51-102 - Continuous Disclosure Obligations
adopted by the Canadian securities regulatory authorities. Additional
information about the Company, including the audited consolidated financial
statements and notes thereto and management's discussion and analysis as at
and for the year ended December 31, 2007, are available on the Company's SEDAR
profile at

                         (*) (*) (*) (*) (*) (*) (*)

    BOE Presentation - Production information is commonly reported in units
of barrel of oil equivalent ("boe"). For purposes of computing such units,
natural gas is converted to equivalent barrels of oil using a conversion
factor of six thousand cubic feet to one barrel of oil. This conversion ratio
of 6:1 is based on an energy equivalent wellhead value for the individual
products. Such disclosure of boes may be misleading, particularly if used in
isolation. Readers should be aware that historical results are not necessarily
indicative of future performance.

    Disclosure of Resources - "Resources" are quantities of petroleum that
are estimated to exist originally in naturally occurring accumulations,
including the quantity of petroleum that is estimated, as of a given date, to
be contained in known accumulations, prior to production, plus those estimated
quantities in accumulations yet to be discovered.
    "Contingent resources" are defined as those quantities of petroleum
estimated, on 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
project stage.
    "Undiscovered resources" are defined as that portion of undiscovered
petroleum initially-in-place which is estimated, as of a given date, not to be
recoverable by future development projects. A portion of these quantities may
become recoverable in the future as commercial circumstances change or
technological developments occur; the remaining portion may never be recovered
due to the physical/chemical constraints represented by subsurface interaction
of fluids and reservoir rocks.
    There is no certainty that it will be commercially viable for the Company
to produce any portion of the bitumen resources detailed in this news release.
The estimated future net revenues and values contained in this news release do
not necessarily represent the market value of such resources. The high level
of uncertainty associated with the Company's possible recovery of any of these
resources is the result of various risks and uncertainties including: current
uncertainties around the specific scope and timing of the development of the
Company's Fort-McMurray properties; the ability of the Company to finance any
potential oil sands projects at its Fort-McMurray properties; proposed
reliance on technologies that have not yet been demonstrated to be
commercially applicable in oil sands applications; lack of regulatory
approvals; the uncertainty regarding marketing plans for production from the
subject areas; and improved estimation of project costs. There are a number of
inherent risks and contingencies associated with such development, including
commodity price fluctuations, project costs and those other risks and
contingencies discussed in more detail in the sections entitled
"Forward-looking Statements and Information" in this news release.
    Resources, undiscovered resources and contingent resources do not
constitute, and should not be confused with, reserves.

    Forward-looking Statements and Information - Certain information
regarding the Company set forth in this news release, including management's
assessment of the Company's future plans, operations, properties, production
and prospects contains forward looking information and statements that involve
substantial known and unknown risks and uncertainties. In some cases, forward
looking information and statements can be identified by terminology such as
"may", "will", "should", "intends", "expects", "projects", "plans",
"anticipates", "targets", "believes", "potential", "estimates", "continues",
"designed", "objective", "maintain", "schedule" and similar expressions 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) possible in-situ development (including the
timing of such development) on the Company's oil sands properties, including
in respect of pilot projects and further development in respect of its
Clearwater East and Clearwater West project areas located in its Fort-McMurray
properties and the joint development of its Hangingstone East project area
with its pooling partner in the area; (ii) expectations regarding future
developments costs and the ability to fund such costs; (iii) future values
that may be attributable to the Company's oil and gas properties, including in
respect of net present value calculations in respect of its Clearwater East
and Clearwater West project areas; (iv) the ability of the current working
capital levels of the Company to maintain future capital expenditures; (v) the
Company's projected capital budget; (vi) successful results from the Company's
2008/2009 winter core drilling program; (vii) crude oil, natural gas and
bitumen production levels; (viii) the continued economic viability of the
Company's projects; (ix) a regulatory regime that will be conducive to the
Company completing its projects (including in respect of environmental
regulation and royalty rates); and (*) projections of market prices and the
demand for the commodities the Company produces or intends to produce. Such
forward-looking statements and information are based on the opinions,
assumptions 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 and information. These factors include the
inherent risks involved in the exploration and development of oil sands
properties, the uncertainties involved in interpreting drilling results and
other geological data, fluctuating oil prices, the possibility of project cost
overruns or unanticipated costs and expenses, uncertainties relating to the
availability and costs of financing needed in the future and other factors
including unforeseen delays. As an oil sands-focused enterprise, the Company
faces risks, including those associated with exploration, development,
approvals 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, management discussion and
analysis and annual information form for the year ended December 31, 2007 as
well as the Company's management discussion and analysis for the period ended
June 30, 2008, all of which are available at 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.
    Statements relating to "resources" are deemed to be forward looking
statements, as they involve the implied assessment, based on certain estimates
and assumptions, that the described resources exist in the quantities
predicted or estimated, and can be profitably produced in the future. See
"Disclosure of Resources" in this news release.
    In assessing the feasibility of potential oil sands projects and in
estimating the value of and the projected start-up dates for pilot projects
and commercial in-situ operations in the Company's Clearwater East and West
project areas located within its Fort-McMurray properties, management of the
Company has made numerous assumptions including: those noted above in respect
of Ryder Scott's NPV calculations; that the Company will be able to obtain
regulatory and other required third party approvals in a timely manner; that
the regulatory framework representing royalties, taxes and environmental
matters will continue to support such projects; that the Company will be able
to generate sufficient cash flow, access capital markets on competitive terms
or find strategic partners in order to enable it to fund such projects; that
future prices for crude oil, bitumen and refined products will continue to be
at levels which support such projects; that the results from the Company's
2008/2009 winter core drilling program will be favourable; that the Company's
independent resource estimates are accurate; and that the Company will be able
to obtain qualified staff and equipment in a timely and cost efficient manner.
In the event that such assumptions are not accurate, this could have an
adverse effect on the ability of the Company to commence such projects within
the noted timelines, or at all.

                         (*) (*) (*) (*) (*) (*) (*)

    The TSX Venture Exchange has not reviewed and does not accept
    responsibility for the adequacy and accuracy of this release.

    Not for dissemination in the United States of America. This news release
shall not constitute an offer to sell or the solicitation of any offer to buy
securities of the Company in any jurisdiction, including the United States.
The common shares of the Company have not been and will not be registered
under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act") or any state securities laws and have not been and will not
be offered or sold in the United States or to any U.S. person except in
certain transactions exempt from the registration requirements of the U.S.
Securities Act and applicable state securities laws.

    %SEDAR: 00020297E

For further information:

For further information: Alberta Oilsands Inc., Suite 2800, 350 - 7th
Avenue S.W., Calgary, Alberta, T2P 3N9, Shabir Premji, Executive Chairman, T:
(403) 232-3341, F: (403) 263-6702,; or Chad Dust,
Executive Vice-President, T: (403) 538-3191, Company

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