Oilsands Hails Positive Results for Axe Lake Reservoir Testing

Oilsands Quest Inc. reported that positive results of advanced laboratory testing and computer simulation
studies support the company's reservoir field test program using steam-based production methods that have been scheduled for late summer 2008 at Test Site 1. These results are another step toward full commercial project development, including assessment of a "fast-track" approach to a first prospective project.

The results of the studies by industry-leading experts, which have been on-going for the past two years, are being used to finalize details of the reservoir field test program. The reports also support the views of Oilsands
Quest's technical and management teams regarding the in-situ production potential of the Axe Lake Discovery located in northwest Saskatchewan near the Alberta border.

"These new results combined with earlier reports confirm McDaniel & Associates assessment that this is a remarkable reservoir, with permeabilities as high as any other in the industry," said Christopher Hopkins, President and CEO.

Oilsands Quest has selected industry-leading experts who specialize in reservoir structural analyses, petro-physical characteristics and production simulation testing including companies such as Hycal, Gushor and Schlumberger.

Hycal Energy Research Laboratories Ltd. provided its report to the company on the results of its advanced laboratory testing. Based on examination and testing of Oilsands Quest's cores from drilling at Axe Lake in 2007, the analysis concludes that linear coreflood recovery factors as high as approximately 90 percent are indicative of the potential to achieve relatively high recovery factors in the field. Hycal also reports that there is good potential for production of bitumen utilizing low to moderate pressure steam, steam with solvent injection and hot-water-flood.

Gushor Inc. also reported results from computer modeling and simulations of reservoir performance at the Axe Lake test sites related to how fast steam rises in the reservoir under different steam injection pressures. The work demonstrates that there are potential operating strategies in which energy loss to the overburden can be delayed or avoided by controlling the steam injection pressure. In addition, hot-water-flood strategies can improve control of energy distribution within the reservoir.

Schlumberger Canada Limited added its views with results from its computer modeling and simulation testing of the Axe Lake reservoir on the ability to monitor and control vertical and horizontal steam growth within the reservoir, demonstrating that fluid communication can be established between the injector well and an observation well without steam rising vertically to the top of the pay zone.

Oilsands Quest believes that the advanced laboratory test results and simulation studies, along with the recent McDaniel & Associates independent resource estimate report indicating that significant portions of the discovered and undiscovered bitumen resources at Axe Lake and Raven Ridge are potentially recoverable using existing demonstrated technologies, provide a reasonable representation of the expected behavior of the reservoir during the field test program.

At the present time, construction and other preparations at Test Site 1 are proceeding on schedule, including the delivery of equipment for steam generation and water treatment.