Oilsands Quest announces private placement of Flow-Through Shares

    Amex:   BQI

    CALGARY, Sept. 22 /CNW/ - Oilsands Quest Inc. (Amex:   BQI) announced today
that it has entered into a non-brokered private placement flow-through share
agreement with UTA Asset Management Corporation ("UTA").
    Oilsands Quest will issue 5,142,857 shares of common stock on a
flow-through basis (the "Flow-Through Shares") at a price of US$3.50
(CDN$3.675) per share to funds managed by or affiliated with UTA, for
aggregate gross proceeds of US$18.0 (CDN$18.9) million. Up to an additional
1,500,000 Flow-Through Shares may be issued to affiliates and employees of
Oilsands Quest at the same price per share for additional aggregate gross
proceeds of up to US$5.25 (CDN$5.5) million. The Flow-Through Shares will be
issued pursuant to certain exemptions from prospectus requirements. Investors
in the United States should be aware that Flow-Through Shares will not be
offered in the United States. The proceeds of the Offering will be used to
incur Canadian Exploration Expenses through exploration work relating to its
exploration programs.
    Closing of the Offering is expected to occur on or about September 26,
2008 and is subject to American Stock Exchange approval and the completion of
definitive documentation.
    The Flow-Through Shares issued pursuant to this Offering have not been
registered under the United States Securities Act of 1933, as amended (the
"Securities Act") and may not be offered or sold in the United States or to
U.S. persons (as such term is defined in Regulation S under the Securities
Act) absent a registration statement or an applicable exemption from
registration. This notice is not an offer to sell or a solicitation of an
offer to buy such securities and is issued pursuant to Rule 135c under the
Securities Act of 1933.

    About Oilsands Quest Inc.

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

    Forward-looking information

    Except for statements of historical fact relating to Oilsands Quest Inc.,
this news release contains certain "forward-looking information" within the
meaning of applicable securities law. Forward-looking information is
frequently characterized by words such as "plan", "expect", "project",
"intend", "believe", "anticipate", "estimate", "potential", "prospective",
"develop" and other similar words, or statements that certain events or
conditions "may", "will", or "could" occur. Forward-looking statements such as
references to Oilsands Quest's drilling programs, exploration programs,
geophysical programs, reservoir testing and analysis program, and the timing
of such programs are based on the opinions and estimates of management and the
company's independent evaluators 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, which include, but are not limited to, risks
inherent in the oil sands industry, regulatory and economic risks, lack of
infrastructure in the region in which the company's resources are located, and
risks associated with the company's ability to implement its business plan.
There is no certainty that it will be commercially viable to produce any
portion of the company's oil sands resources. 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-K 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: Paul K. O'Donoghue, MBA, Vice President,
Investor Relations and Corporate Planning, Oilsands Quest Inc., Email:
investorrelations@oilsandsquest.com, (403) 263-1623

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