Oilsands Quest announces close of exercise of over-allotment option by Underwriters

    Amex:   BQI

    CALGARY, Dec. 20 /CNW/ - Oilsands Quest Inc. (Amex:   BQI) (the "Company")
announces the closing today of the previously-announced exercise of the
Underwriters' over-allotment option pursuant to the Company's recent public
offering (the "Offering"), which closed on December 5, 2007.
    The over-allotment option is for the purchase of 1,650,000 units (each
comprised of one common share and one-half of a common share purchase warrant
of the Company, or a total of 1,650,000 shares and 825,000 warrants) which
results in an additional US$7.8 million in net proceeds to the Company. Total
net proceeds to the Company from the Offering are approximately
US$75.5 million. In total the Offering was comprised of 12,650,000 common
shares, 6,325,000 common share warrants and 2,600,000 common shares on a
flow-through basis.
    The Offering was made through a syndicate of underwriters (the
"Underwriters") bookrun by TD Securities Inc. and including Genuity Capital
Markets, CIBC World Markets Inc., Desjardins Securities Inc., Blackmont
Capital Inc., Canaccord Capital Corporation and Lehman Brothers Canada Inc. in
Canada and their respective U.S. registered broker dealer affiliates.
    The Company intends to use the proceeds of the Offering for reservoir
testing and other costs associated with the Axe Lake Discovery and for general
corporate purposes. The Company's shares and warrants are listed for trading
on the American Stock Exchange (Amex) under the symbols BQI and BQI.WS.

    About Oilsands Quest Inc.

    Oilsands Quest Inc. is aggressively exploring Canada's largest contiguous
oil sands land holding by applying its technical expertise to develop multiple
potential global-scale discoveries. The company (www.oilsandsquest.com) is the
originator of Saskatchewan's emerging oil sands industry.

    Forward-looking information

    Except for statements of historical fact relating to the company, this
news release contains certain "forward-looking information" within the meaning
of applicable securities law. Forward-looking statements such as references to
Oilsands Quest's exploration, technical and development programs and future
discoveries 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 anticipated in the forward-looking statements.
These risks, uncertainties and other factors include, but are not limited to,
exploration and technical risks inherent in the oil sands industry, regulatory
and economic risks, and risks associated with the company's ability to
implement its business plan. There are uncertainties inherent in
forward-looking information, including factors beyond Oilsands Quest's
control, and no assurance can be given that the programs will be completed on
time, on budget or at all. Oilsands Quest undertakes no obligation to update
forward-looking information if circumstances or management's estimates or
opinions should change, except as required by law. The reader is cautioned not
to place undue reliance on forward-looking statements. The risks and
uncertainties set forth above are not exhaustive. Readers should refer to
Oilsands Quest's current annual report on Form 10-KSB and other document
filings, which are available at www.sedar.com and at www.sec.gov for a
detailed discussion of these risks and uncertainties and details regarding the
location and extent of Oilsands Quest's land holdings.

For further information:

For further information: General inquiries and retail investors, contact
Hedlin Lauder Investor Relations Ltd., Toll Free 1-800-299-7823, Office (403)
232-6251, Email irinfo@hedlinlauder.com; Institutional investors, contact
BarnesMcInerney Inc.; Toll Free 1-866-794-7288, Office (416) 371-0510, Email

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Oilsands Quest Inc.

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