OilSands Quest Enters Into Private Placement

Oilsands Quest Inc. has entered into a private placement financing agreement with a syndicate of underwriters on a bought deal basis, to issue 3,266,000 common shares on a flow-through basis.

The Flow-Through shares will be issued to investors at a price of C$3.675 (US $3.50) per share, for total gross proceeds to Oilsands Quest of approximately C$12 million.

This financing is in addition to the non-brokered private placement of up to 6,642,857 Flow-Through Shares announced previously by Oilsands Quest, priced at US $3.50 (C$3.675) per share, for aggregate proceeds of up to US $23.3 million (C$24.4 million).

The earlier announced private placement and the Offering are expected to result in aggregate gross proceeds of US $34.9 million (C$36.4 million). The proceeds from the non-brokered private placement and the Offering will be used to incur Canadian Exploration Expenses through exploration work relating to its planned exploration programs.

The Flow-Through Shares will be issued to investors in Canada pursuant to certain exemptions from prospectus requirements. Investors in the United States should be aware that Flow-Through Shares will not be offered in the United States.

Closing of the Offering is expected to occur on or about October 3, 2008 and is subject to American Stock Exchange approval and the completion of definitive documentation.