Oilsands Quest Inc. announces closing of previously-announced offering

    NYSE Amex:   BQI

    CALGARY, May 12 /CNW/ - Oilsands Quest Inc. (Amex:   BQI) (the "Company")
announced today the completion of its previously-announced marketed public
offering (the "Offering"). A total of 35,075,000 units ("Units") were issued
to investors at a price of US$0.85 per Unit for gross proceeds to Oilsands
Quest of US$29.8 million, including the over-allotment option.
    Each Unit is comprised of one common share ("Share") and one-half of a
common share purchase warrant of the Company ("Warrant") with each whole
Warrant entitling the purchaser to purchase one Share of the Company for
US$1.10 until May 12, 2011.
    The Warrants associated with these Units are listed for trading on the
NYSE Amex under the symbol BQI.WS.A.
    The Offering was made through a syndicate of agents led by Genuity
Capital Markets and TD Securities Inc. and included Canaccord Capital
Corporation, Dundee Securities Corporation and RBC Capital Markets (the
"Agents"). The over-allotment option granted to the Agents was exercised to
purchase 4,575,000 Shares and 2,287,500 Warrants.
    The Company will use the funds to continue its testing activities at Test
Sites 1 and 3, continue its exploration activities on its existing permits and
licenses and for general corporate purposes. Specific allocations of the
proceeds for such purposes have not been made at this time.

    About Oilsands Quest

    Oilsands Quest Inc. is exploring Canada's largest holding of contiguous
oil sands permits and licences, located in Saskatchewan and Alberta, and
developing Saskatchewan's first global-scale oil sands discovery. It is
leading the establishment of the province of Saskatchewan's emerging oil sands

    Forward-looking information:

    Forward-Looking Statements: This news release contains certain
"forward-looking information" within the meaning of applicable securities law
including statements regarding the Company's expected use of proceeds of the
Offering. These statements are only predictions. Forward-looking information
is based on the opinions and estimates of management at the date the
information is provided, and is 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 information. For
a description of the risks and uncertainties facing the Company and its
business and affairs, readers should refer to the Company's Annual Report on
Form 10K for the year ended April 30, 2008, as amended and subsequent
quarterly reports on Form 10Q available on www.sedar.com and www.edgar.com.
The Company undertakes no obligation to update forward-looking statements if
circumstances or management's estimates or opinions should change, unless
required by law. The reader is cautioned not to place undue reliance on
forward-looking statements.

For further information:

For further information: Paul K. O'Donoghue, MBA, Vice President,
Investor Relations and Corporate Planning, Email: ir@oilsandsquest.com,
Investor Line: 1-877-718-8941

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Oilsands Quest Inc.

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