Alberta Oilsands Farms-In to O&G Lands in Central and Northwest Alberta

Alberta Oilsands has provided an operations update in respect of its Clearwater West property near Ft. McMurray and its Leduc property near Edmonton as well as the entering into of a significant farm-in agreement with respect to properties located in Central and Northwest Alberta.

Operations Update

At its Ft. McMurray Clearwater West property, AOS has completed its winter 2009 program by drilling 8 wells on its core property. The drilling results from Section 21 and 22 Twp 88 R8W4 confirm high quality bitumen with an estimated total McMurray formation gross bitumen sand thickness based on logs averaging 40 meters (m) on the wells with a maximum of 55m in the 13-22-088-08W4 and a minimum of 26m. In conjunction with the work program AOS has also completed cap rock integrity testing confirming maximum pressure
limits which will determine SAGD injection pressure, as well as water source and disposal zone testing. The positive coring and cap rock work results provide AOS with the required data to proceed with its 2,000 boe/d SAGD pilot project submission utilizing enhanced SAGD technologies.

AOS has elected to focus only on coring at the Clearwater West Property, the most advanced of the entire company portfolio, and defer activities on all other oil sands properties, including the Hangingstone East Property with AOS's joint venture partner due to the current economic environment.

At Leduc, AOS continues to reduce operating costs at its central Alberta (100% Working Interest) operated property as a result of facilities upgrades last year. Up to six development drilling locations on this Nisku light oil property have been indentified to grow production as the company continues to embark on seeking out conventional, light oil focused, short term to cash flow opportunities. Total corporate production is currently 75 boe/d.

Farm-in Agreement

Alberta Oilsands Inc. is pleased to announce that on January 26, 2009 it secured a significant conventional oil and gas farm-in on lands in Central and Northwest Alberta. AOS has the right to earn a minimum 50% working interest in over 31 sections of land in Northwest Alberta (Chinchaga/Lady Fern) and Central Alberta (Mcleod).

AOS will fund a disproportionate percentage of the total drilling, casing, and completion costs and its 50% partner will fund a disproportionate percentage of the total equipping, tie-in, and facilities costs. The farm-in agreement provides AOS with the option to drill up to 7 locations in 3 areas throughout northwest and central Alberta targeting drill ready, liquids rich natural gas pools. Offsetting pools in the Chinchaga/Lady Fern/Mcleod area have produced between 5 to 20 BCF(1) (billion cubic feet) per prospect. Each area with success has 2-3 repeatable follow-up development locations on the 50% working interest earned lands. The Northwest Alberta property is located in the gas prone Chinchaga/Lady Fern area and is a high quality, high impact prospect identified by 3D seismic. AOS has committed to
the drilling of one well in the Chinchaga/Lady Fern area which is expected to spud by February 20, 2009. The well and pipeline have been surveyed and licensed.

Shabir Premji AOS Executive Chairman commented, "We are pleased to partner with an experienced operator with an industry leading technical team in the respective areas. The high quality prospects secured in this agreement would most likely not have been available in a more normal business climate."