Oilsands Quest to Sell Eagles Nest Asset

Oilsands Quest Inc. has secured a commitment for debtor-in-possession ("DIP") financing of CAN $3.75 million (the "DIP Facility"), for the purposes of funding operating costs and other expenses while the Company proceeds with its previously-announced solicitation process while under creditor protection.

The DIP Facility is being provided by Century Services Inc. (the "DIP Lender") pursuant to the terms and conditions of a Commitment Letter dated February 1, 2012. The DIP Facility will be repayable on the earlier of one year following closing or the termination of the Order from the Alberta Court of Queen's Bench (the "Court") providing creditor protection under the Companies' Creditors Arrangement Act (Canada) ("CCAA"). The DIP Facility is subject to the completion of definitive agreements and Court approval, which the company expects to obtain by February 16, 2012, after which advances under the DIP Facility will be available to Oilsands Quest.

Oilsands Quest has also entered into a purchase and sale agreement with an unrelated third-party entity to sell its non-core Eagles Nest asset for CAN $4.4 million. The purchaser has agreed to pay deposits of CAN $300,000 by February 21, 2012 with closing anticipated on or before March 23, 2012. The asset sale is also conditional on Court approval and normal closing conditions and adjustments. There can therefore be no assurance that the sale will be concluded.

The Eagles Nest prospect covers 22,773 acres (9,216 hectares) located in the Athabasca oil sands region northwest of Fort McMurray, Alberta. The property is geographically distant from Oilsands Quest's other oil sands discoveries and largely unexplored. Resource estimates for the property are available on the Company's website.

TD Securities Inc. acted as financial advisor to Oilsands Quest on the sale of Eagles Nest and, as previously disclosed, continues to assist the Company with the ongoing solicitation process.

Oilsands Quest continues to operate under the protection of CCAA with the assistance of a Court-appointed monitor. The Company's common shares remain suspended from trading until either a delisting occurs or until the NYSE permits the resumption of trading.