CanWest, Oilsands Quest Estimate OPIB from Initial Drilling

CanWest Petroleum Corp. and Oilsands Quest Inc. have announced management's preliminary estimate of the original bitumen resources in place (OBIP) in an area covered by Oilsands Quest's Phase I drilling program in northwest Saskatchewan.

The program consisted of drilling on two blocks on Oilsands Quest's 100-percent-owned Permit PS00210, located in Township 95, Ranges 24 and 25 West of the Third Meridian. It is approximately 50 kilometers (30 miles) east of Suncor's Firebag operations. Oilsands Quest's exploration permits were granted under Saskatchewan's Oil Shale Regulations, 1964, and will expire in 2009 unless converted to leases or further extensions are granted. The preliminary OBIP estimate is 250 million barrels and is based on the west block, a four-section area of Permit PS00210 surrounding 13 drill holes. The east block will require further drilling before management can provide an estimate.

"We continue to be delighted with the results of our initial drilling program," said Christopher H. Hopkins, Oilsands Quest’s president and CEO. He added that assumptions about the commercial viability of resource potential or whether currently commercial recovery processes will be effective cannot be made at this stage without further drilling. The area covered in the OBIP estimate represents less than one-half of one percent of Oilsands Quest's total permit lands.

The OBIP estimate was based on the evaluation of cores and well log data from holes drilled in the Phase I drilling program. 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.

In interim drilling results released on June 14, 2006, CanWest and Oilsands Quest also noted that eight wells drilled in the best three-section block had an average pay zone of 19 meters (62 feet), with one hole having more than 28 meters (91 feet) of pay. Grades of bitumen saturation by weight for those eight wells were up to 18 percent. Of the 24 wells drilled in the program, 19 intersected the bitumen-bearing McMurray formation, which represents an 80-percent success rate.

Oilsands Quest is now focusing on plans for its winter 2006 drilling program, currently budgeted for CDN$35 million (US$31.4 million), which will cover a much larger area in order to begin to quantify and qualify the nature of the bitumen resources. The company has received approval for a 150-well winter 2006 program and will apply for regulatory approval for an additional 100 holes. It has eight core drilling rigs committed to the winter 2006 program. In addition, Oilsands Quest has applied for a summer 2006 exploration program consisting of drilling with one rig, geophysical evaluation, and construction of additional infrastructure in preparation for the 2006 winter program. In this area of Saskatchewan, the winter drilling season, which is dependent on weather conditions, is typically from November to April.

CanWest Petroleum Corp. owns a 60.7-percent interest, on a fully diluted basis, in Oilsands Quest Inc. On June 12, 2006, CanWest Petroleum and Oilsands Quest announced that the companies entered into an agreement that provides for the combination of the two companies; this transaction is expected to be completed on August 14, 2006.


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