Oilsands Quest provides operations update and preliminary management estimate of bitumen resources

    Amex:   BQI

    CALGARY, March 26 /CNW/ - Oilsands Quest Inc. (Amex:   BQI) provides a
comprehensive operations update on the exploration program conducted in
Saskatchewan and Alberta, including management's preliminary estimate of
original bitumen resources in place (OBIP) in the Axe Lake Discovery area.

    Preliminary management OBIP estimate

    The preliminary management OBIP estimate of the Axe Lake Discovery to
date is as follows:

       1.25 billion to 1.50 billion barrels OBIP (High Estimate - P10)
       0.60 billion to 0.75 billion barrels OBIP (Best Estimate - P50)

    Management's preliminary OBIP estimate of the Axe Lake Discovery area is
based on management's assessment of the winter 2006/07 drilling program
results up to and including March 25, 2007, together with the independently
evaluated core and well log data from holes drilled during the winter 2005/06
drilling program (as reported on by Norwest Corporation in August 2006). The
independent consultant's assessment of the Axe Lake Discovery will be
completed in the fall of 2007.
    The area of the OBIP estimate within the Axe Lake Discovery covers
approximately 36 sections (1 township) of Permits PS00208 and PS00210 (100%
Oilsands Quest) located in the north half of Township 94 and the south half of
Township 95, Ranges 24 and 25 West of the Third Meridian. It is approximately
50 kilometres (30 miles) east of Suncor's Firebag operations.
    OBIP is the gross volume of bitumen estimated, at a particular time, to
be initially contained in a reservoir before any volume has been produced and
without regard for the extent to which volumes will be recovered. The High
Estimate (P10) is based on extrapolating data to approximately 1,000 metres
(3,281 feet) from the well bore and the Best Estimate (P50) is based on
extrapolating data to approximately 400 metres (1,312 feet) from the well
bore. The estimate was made in accordance with the Canadian Oil and Gas
Evaluation Handbook (COGEH), which is the primary reference for reporting
resources under the National Instrument 51 - 101 Standards of Disclosure for
Oil and Gas Activities. The commercial viability of the resource potential, or
whether currently commercial recovery processes will be applicable, cannot be
determined without further drilling, testing and analysis.
    Oilsands Quest's exploration permits were granted under The Oil Shale
Regulations, 1964 of Saskatchewan subject to amendments from time to time and
will expire in 2009 unless converted to leases or extensions are granted.

    Status of 2006/07 exploration program

    A total of 150 holes have been drilled in this winter's drilling season
on Oilsands Quest's permit lands in northwest Saskatchewan. Due to warm
weather and associated spring thaw conditions, the company has initiated the
wind-down of its winter drilling operations.
    During its winter 2006/07 exploration program, Oilsands Quest has
accomplished amongst other goals the following:

    -   Identification of the Axe Lake Discovery area
    -   Delineation drilling in the Axe Lake Discovery area with 116 holes
    -   Expansion of the exploration focus to the north and south of the Axe
        Lake Discovery area with the drilling of 34 holes and completion of
        57 miles of 2D seismic and 528 miles of aeromagnetic and
        electromagnetic surveys
    -   The identification of numerous significant exploration leads for
        future programs
    -   Installation and construction of significant infrastructure (road
        networks, multiple camp facilities, drilling pads, and airstrips)

    Oilsands Quest is in the process of making its application to the
Saskatchewan Government for permission to undertake a summer drilling program
in 2007.

    Results of delineation drilling at Axe Lake Discovery area to date

    At Axe Lake Discovery, Oilsands Quest has found:

    -   thick, continuous oil sands: McMurray Formation up to 45 metres
        (148 feet) and oil sands thickness of up to 30 metres (98 feet)
    -   coarse-grained sands with very low fines content
    -   no shale intervals
    -   excellent permeability (over 5 Darcies)
    -   very good porosity (36-39%)
    -   average depths of 185 - 200 metres (607 - 656 feet)

    No evidence of top or bottom water ("thief" zones) was observed at any of
the drill holes in the Axe Lake Discovery area. Results of the delineation
drilling indicate that the Axe Lake Discovery area extends and is open to the
east, west, and south.
    Management has concluded that this resource will likely be suitable for
in-situ recovery. In February 2007, the company initiated
pre-commercialization studies. Plans for large-scale resource recovery tests
and simulation studies are being developed to determine the quality of the oil
sands and bitumen characteristics and to investigate alternative in situ
recovery mechanisms, including an onsite pilot plant. Detailed project
timelines continue to be developed.

    Results of activities in new exploration areas

    In the areas to the north and south of the Axe Lake Discovery, Oilsands
Quest conducted exploratory drilling and extensive seismic and airborne
surveys. To March 25, 2007, a total of 34 exploratory holes were drilled, 92
kilometres (57 miles) of seismic surveys (including Alberta) were completed,
and 850 kilometres (528 miles) of aeromagnetic and electromagnetic surveys
were conducted. A further 35 kilometres (22 miles) of seismic surveys are
being conducted this week. Numerous significant exploration targets have been
identified for future field programs.

    Implications of the recent purchase of oil sands exploration permits
    in Alberta

    On March 22, 2007, Oilsands Quest announced the acquisition of oil sands
exploration permits covering approximately three townships in Alberta, located
directly west and contiguous to the Axe Lake Discovery area and six miles from
the Encana Borealis project currently under development.
    Based on observations of resource extensions from the Axe Lake Discovery
drill holes adjacent to the Alberta border into the Alberta lands and seismic
surveys completed by Oilsands Quest on these permit lands prior to the Alberta
land sale this past week, the company has assessed its Alberta permits as
highly prospective. Oilsands Quest's current assessment of the resource
potential of these lands is between 1.5 to 3.0+ billion barrels per township.
This assessment of resource potential does not constitute an OBIP estimate.
Further drilling and analysis is required to develop an OBIP estimate for
these permit lands. The Company will be devoting considerable exploration
efforts in the coming months to further define the structures identified by
seismic surveys on these permit lands.

    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 information is frequently
characterized by words such as "plan", "expect", "project", "intend",
"believe", "anticipate", "estimate", "potential", "prospective" and other
similar words, or statements that certain events or conditions "may" "will" or
"could" occur. Forward-looking statements such as the estimate of OBIP and the
assessment of resource potential, references to Oilsands Quest Inc.'s drilling
program, geophysical programs, testing and analysis programs and timing of
such programs 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,
which include but are not limited to 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 Inc.'s
control, and no assurance can be given that the programs will be completed on
time, on budget or at all. In addition, there are numerous uncertainties
inherent in estimating OBIP, including many factors beyond the companies'
control, and no assurance can be given that the indicated level of
    OBIP or the recovery thereof will be realized. In general, estimates of
OBIP and assessments of resource potential are based upon a number of factors
and assumptions made as of the date on which the estimates and assessments
were determined, such as geological and engineering estimates which have
inherent uncertainties. The estimates of OBIP and assessments of resource
potential are the opinion of management of Oilsands Quest and are not
supported by an independent evaluation report at this time. The OBIP estimate
for the lands described in this news release may not reflect the same
confidence level as estimates of OBIP for Oilsands Quest's total permit lands,
due to the effects of aggregation. Oilsands Quest Inc. 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 exhausting.
Readers should refer to Oilsands Quest's current annual report on Form 10KSB
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 the Oilsands Quest permit lands.

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 The
Buick Group, Toll Free 1-877-748-0914, Office (416) 915-0915, Email

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