Oilsands Quest to Divest Non-Core Assets

Oilsands Quest is initiating a process to divest its Eagles Nest oil sands lease and Pasquia Hills oil shale permits, following a determination by the Board of Directors that these assets are non-core. As previously announced, Oilsands Quest has retained TD Securities Inc. to assist the Company in reviewing strategic alternatives and the sale process for these non-core assets is an important initial step in that review. Both Eagles Nest and Pasquia Hills are outside the Company's primary project and discovery areas of Axe Lake, Wallace Creek and Raven Ridge.

The Eagles Nest oil sands lease covers 22,773 acres (9,216 hectares) 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. According to McDaniel and Associates Consultants Ltd., the Company's 100 per cent interest in Eagles Nest contains 367 million barrels of discovered bitumen initially in place (best estimate)(1) and 1,573 million barrels of undiscovered bitumen initially in place (best estimate)(1). Details of this resource estimate were previously disclosed by the Company in a release dated July 7, 2010, and in related filings on SEDAR.

The Pasquia Hills oil shale properties consist of several permits covering 489,730 acres (198,187 hectares) in southeast Saskatchewan, in which the Company holds a 100 per cent interest. In 2008 and 2009, Oilsands Quest conducted small exploration programs by drilling 23 exploration holes on the properties, 20 of which intersected oil shale. An independent evaluation by Norwest Corporation, with an effective date of September 15, 2010, determined that the area covered by these permits contains 19.3 billion barrels of discovered petroleum initially in place ("PIIP")(1) and 4.8 billion barrels of undiscovered PIIP(1) using a grade cut-off of 20 liters per tonne.

Oilsands Quest has recognized for some time that retaining and developing the Pasquia Hills oil shale deposits over the remaining permit life would require considerable time, effort and financial resources at the same time that the Company was in the process of exploring and developing its significant portfolio of oil sands assets.

"While it is too soon to predict the outcome of our review of strategic alternatives, we know that we want to stay focused on our core assets," said Brian MacNeill, Acting Chief Executive Officer of Oilsands Quest. "With over 3.1 billion barrels of discovered bitumen initially in place and 250 million barrels of economic contingent resources, we have ample opportunity in our three core areas for a company of our size. Selling one or both of our non-core assets will improve our near-term liquidity and increase our flexibility in pursuing the strategic review process."

Oilsands Quest is optimistic that a sale of one or both of these non-core assets will be completed by early 2011. The broader review of strategic alternatives remains underway at Oilsands Quest. There can be no assurance that the sale of non-core assets will be completed or that the review of strategic alternatives will result in a financing or a sale of the company or in any other transaction. There is no timetable for the review, and the company does not intend to comment further regarding the evaluation of strategic alternatives unless the Board agrees to a definitive transaction or the process is concluded.