Oilsands Quest updates drilling activity and conference participation

    Amex:   BQI

    CALGARY, Jan. 8 /CNW/ - Oilsands Quest Inc. (Amex:   BQI) today announced
the resumption of drilling on its Saskatchewan permits and the initiation of
drilling on its contiguous Alberta permits. The company also announced its
participation in two oil sands conferences being held later this month in
London and Calgary.

    Participation at upcoming conferences

    In January 2008, Oilsands Quest will participate in two private oil sands

    -   Christopher H. Hopkins, President and Chief Executive Officer, will
        address the TD Newcrest Oil Sands Forum 2008 conference in London,
        England, on Monday, January 14.
    -   Errin Kimball, Vice-President Exploration, will address the Insight
        Canadian Oil Sands Summit in Calgary, Alberta, on Wednesday,
        January 16.

    The conferences are not open to the public; however, Oilsands Quest's
presentation will be posted on the company's web site immediately following
the January 14 conference (www.oilsandsquest.com).

    Saskatchewan program

    Activity at Oilsands Quest's Axe Lake Discovery area in northwest
Saskatchewan resumed on January 2, 2008, following a 10-day Christmas break.
In the winter months ahead, Oilsands Quest's objectives include the following:

    -   Delineation drilling of the Axe Lake Discovery with four drill rigs
        to provide improved certainty of the Discovered Resource, which has
        been estimated in an independent evaluation at 1.55 billion barrels
        of bitumen (High Estimate).
    -   Advancement of commercialization of the Axe Lake Discovery with
        drilling to further define the reservoir and its overburden
        characteristics and to obtain drill core material for large-scale
        recovery testing.
    -   Exploration of undrilled areas of the Axe Lake Discovery, which
        Oilsands Quest has internally estimated to contain Undiscovered
        Resources of 1.0 billion barrels of bitumen. Future exploration
        programs will address Oilsands Quest's estimate of additional
        Undiscovered Resources of 3.0 billion barrels of bitumen outside the
        Axe Lake Discovery area within Saskatchewan.
    -   Completion of 3-D seismic programs to provide detailed, high-
        resolution imaging of the Axe Lake Discovery for accurate planning
        and implementation of an accelerated development program.

    Oilsands Quest drilled 87 holes in its Fall 2007 drilling program in the
Axe Lake Discovery area. Fall operations also included cutting approximately
500 miles (805 km) of seismic line covering 9.5 square miles (25 sq km). Since
January 2006, Oilsands Quest has drilled a total of 261 exploration and
delineation holes on its oil sands exploration permits in Saskatchewan.
    The area of the Discovered Resources estimate within the Axe Lake
Discovery covers approximately 36 sections (one 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.
The Undiscovered Resource estimate within the Axe Lake Discovery covers
approximately 72 sections in Townships 94 and 95 adjacent to the Discovered
Resource locations (100% Oilsands Quest).

    Alberta program

    Oilsands Quest recently received regulatory approval to initiate drilling
on its oil sands exploration permits in northeast Alberta which are contiguous
to its Saskatchewan permits. Management has estimated total Undiscovered
Resources of 4.5 billion barrels of bitumen on these lands totaling an area of
approximately 106 sections (approximately 3 townships) located in Townships 92
to 94 West of the Fourth Meridian (100% Oilsands Quest) adjacent to the
Saskatchewan border.
    Two core-hole drill rigs are being deployed immediately with two more
scheduled for arrival later in January. The drilling program of 30 holes will
focus on structures identified in portions of Townships 93 and 94 by 2-D
seismic programs conducted by Oilsands Quest in 2007. During fall 2007, more
than 300 miles (480 km) of 3-D seismic line covering approximately five square
miles (13 sq km) were cut over structures in Alberta adjacent to the Axe Lake
Discovery in Saskatchewan.
    All of the Company's Discovered and Undiscovered Resource estimates are
of in place volumes of bitumen and do not represent recoverable volumes. There
is no certainty that it will be commercially viable to produce any portion of
the Discovered Resources. In the case of the Undiscovered Resources, there is
no certainty that any portion will be discovered and, if discovered, that it
will be commercially viable to produce. The independent Discovered Resources
estimate is effective as of October 31, 2007 and Oilsands Quest's Undiscovered
Resources estimates are effective as of July 12, 2007.

    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 is the originator of
Saskatchewan's emerging oil sands industry.

    Forward-looking information

    Except for statements of historical fact relating to Oilsands Quest, 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 resource estimates, 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, lack of infrastructure in the region
in which the company's resources are located and risks associated with
Oilsands Quest'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.


    As defined in the COGE Handbook, "Discovered Resources are those
quantities of oil and gas estimated on a given date to be remaining in, plus
those quantities already produced from, known accumulations. Discovered
Resources are divided into economic and uneconomic categories, with the
estimated future recoverable portion classified as reserves and contingent
reserves, respectively."
    The Discovered Resources estimates described above were determined in
accordance with the COGE Handbook using the following mutually exclusive

    -   Low Estimate: This is considered to be a conservative estimate of the
        quantity of bitumen that exists within the accumulation, which under
        probabilistic methodology reflects a P90 confidence level.
    -   Best Estimate: This is considered to be the best estimate of the
        quantity of bitumen that exists within the accumulation. Under
        probabilistic methodology, this term is a measure of the central
        tendency of the uncertainty distribution (most likely/mode,
        P50/median, or arithmetic average/mean).
    -   High Estimate: This is considered to be an optimistic estimate of the
        quantity of bitumen that exists within the accumulation, which under
        probabilistic methodology reflects a P10 confidence level.

    Discovered Resources can be further classified into four sub-categories:
cumulative production; reserves; contingent resources; and unrecoverable
resources. The Discovered Resources disclosed by Oilsands Quest in its
independent Discovered Resource estimate can not at this time be classified
into one of these four sub-categories for the following reasons:

    1) cumulative production: no amount of production has yet taken place;
    2) reserves: Oilsands Quest has not yet determined what in-situ recovery
    process may be suitable for this Discovered Resource and consequently an
    in-situ recovery factor has not been determined to estimate reserves;
    3) contingent resources: Oilsands Quest expects that a portion of the
    Discovered Resources will be economic to recover, but commercial project
    economics have not yet been determined in absence of a determined
    recovery method; and
    4) unrecoverable resources: Oilsands Quest expects that portions of the
    Discovered Resources will be classified as recoverable and unrecoverable,
    but a suitable in-situ recovery process and consequently an in-situ
    recovery factor have not yet been determined, therefore quantification of
    these respective volumes cannot yet be made.

    The commercial viability of the Discovered Resources at the Axe Lake
Discovery, or whether currently available commercial recovery processes will
be applicable, cannot be determined without further drilling, testing and
    As defined in the COGE Handbook, "Undiscovered Resources are those
quantities of oil and gas estimated on a given date to be contained in
accumulations yet to be discovered."
    Oilsands Quest is committed to complying with the evolving regulatory
requirements regarding resource and reserve reporting as mandated by National
Instrument 51-101 in matters such as resource classification and terminology.
The COGE Handbook is available online at www.petsoc.org and National
Instrument 51-101 is available online at www.albertasecurities.com.

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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