Oilsands Quest Estimates Resource Potential at 10 Billion Barrels

Oilsands Quest Inc. announces management's estimate of resource potential of 10 billion barrels of bitumen for its contiguous oil sands exploration permits in northwest Saskatchewan and northeast Alberta. This estimate includes management's estimate of Original Bitumen In Place (OBIP) for the Axe Lake Discovery on its Saskatchewan permits as well as management's estimate of resource potential on certain portions of the remainder of its Saskatchewan permits and its adjacent Alberta permits.

Management's estimate of resource potential, 10 billion barrels, is based on the following evaluations:

- Axe Lake Discovery area: Management's estimate of OBIP for Axe Lake is 1.4 to 1.5 billion barrels and its estimate of additional resource potential for Axe Lake is 0.7 to 1.3 billion barrels, for a total potential bitumen resource of 2.1 to 2.8 billion barrels. (This total estimate has been rounded to 2.5 billion barrels for ease of reference). The independent consultant's estimate of OBIP for the Axe Lake Discovery will be completed in the fall of 2007.

- Other portions of the company's Saskatchewan permits: Management's estimate of additional resource potential for selected areas outside the Axe Lake Discovery area (areas to the south and northeast) is 3.0 billion barrels.

- Adjacent Alberta permits: Management's estimate of the resource potential for approximately two townships of the company's adjacent permits in Alberta is 4.5 billion barrels.

"Axe Lake is proving to be suitable for in-situ recovery," said Christopher H. Hopkins, President and Chief Executive Officer of Oilsands Quest. "According to results of studies of the bitumen characteristics to date, we expect the high permeability and porosity characteristics will contribute to high recovery factors. As a result of the homogeneity of the sands, hot water (wet steam) recovery processes are proving to be efficient at relatively low pressure and temperatures (from 80 degrees Celsius), with yields of 54 to 83 percent under lab conditions."

The Axe Lake bitumen resource is characterized by thick, continuous, coarse-grained oil sands in reservoirs at depths from 185 to 205 meters. Studies to date suggest that grain size distribution of the coarse sands, which ranges from smaller particles at the top of the pay zone to larger particles at the bottom, will enhance drainage, thereby improving production and economics. The clay-rich layer overlying the reservoir is expected to provide an effective seal for anticipated recovery processes.

The Axe Lake discovery is classified as a Discovered Resource. The Discovered Resources classification is in accordance with the Canadian Oil and Gas Evaluation Handbook (COGEH), which is the primary reference for reporting resources under National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities promulgated by the Canadian Securities Administrators. As defined in the COGEH, "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." 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 OBIP estimates cannot at this time be classified into one of these four sub-categories

Original Bitumen In Place

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. Management's estimate is a High Estimate (P10), based on extrapolating data to approximately 1,000 meters (3,281 feet) from the well bore. The estimate was made in accordance with the COGEH. The commercial viability of the bitumen resource, or whether currently commercial recovery processes will be applicable, cannot be determined without further drilling, testing and analysis. The area of the OBIP 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. It is approximately 50 kilometers (30 miles) east of Suncor's Firebag operations.

Resource Potential

Management's estimate of Resource Potential is based on the definition of Undiscovered Resources, which is a recognized category in the COGEH. As defined in the COGEH, "Undiscovered resources are those quantities of oil and gas estimated on a given date to be contained in accumulations yet to be discovered." Management's assessment of resource potential is based on observations of resource extensions from the Axe Lake Discovery drill holes adjacent to and those on the lands assessed and on seismic surveys completed to date. There is no certainty that any portion of the resource potential will be discovered and, if discovered, it may not be economically viable or technically feasible to produce. 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 COGEH can be obtained online (www.petsoc.org).