Oilsands Quest (BQI)

Valuable land holdings in Saskatchewan: When most people think of oil sands/shale in Canada, they think of Alberta. However, BQI and their team of geologists thought that the rock formations in Saskatchewan were also attractive and decided to become the first company to drill in the region, beginning Saskatchewan’s oil sands industry. The company currently holds 707,770 acres of oil sands land, mostly in Saskatchewan, with some land overlapping into Alberta, and 1.2m acres of oil shale land in Saskatchewan.

June 26 /CNW/ - Oilsands Quest Inc. (Amex: BQI) announces its independent resource estimates for its Axe Lake Discovery and its Raven Ridge Discovery. Raven Ridge has been reclassified to a Discovery from an "area of interest". Oilsands Quest announces the initialization of engineering plans for the first 30,000 barrels per day commercial project planned to develop a portion of the Axe Lake Discovery and provides an update on its reservoir test program.

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   Independent resource estimate

          Summary of Discovered and Undiscovered Bitumen Resources
            McDaniel & Associates - October 2007 and June 2008
                           (Billions of barrels)

                             Axe Lake        Raven Ridge          Total
                         ---------------------------------------------------
                          2007     2008     2007     2008     2007     2008
                         ---------------------------------------------------
   Estimated Discovered
    Bitumen Resources
    (Discovered Bitumen
    Initially in-Place)
     Low Estimate (P90)  1.117    1.241      n/a    0.337    1.117    1.578
     Best Estimate (P50) 1.344    1.723      n/a    0.566    1.344    2.289
     High Estimate (P10) 1.547    2.334      n/a    0.727    1.547    3.061

McDaniel & Associates is of the opinion that significant portions of the discovered and undiscovered bitumen resources at Axe Lake and Raven Ridge are potentially recoverable using existing demonstrated technologies. However, insufficient reservoir data exists at this time to allow McDaniel & Associates to estimate the quantities of recoverable and unrecoverable volumes underlying the current estimates of discovered resources and undiscovered resources at Axe Lake and Raven Ridge. Oilsands Quest and McDaniel & Associates expect that additional data will be derived from the reservoir test program Oilsands Quest intends to conduct during 2008/2009. The additional data to be gathered from this reservoir test program will include reservoir pressure, additional permeability and mobility data, flow data and bitumen/till interface behavior. McDaniel & Associates advises that this data is required in order to properly estimate the proportions of recoverable and unrecoverable volumes. It is expected that when this data is available, Oilsands Quest will engage an independent qualified reserves evaluator to provide the further sub-classification of the discovered and undiscovered resource estimates at Axe Lake and Raven Ridge as contingent resources and prospective resources.

Attractive Take Over Target For Big Oil: Major integrated oil and gas companies have turned their attention to Canada after Chavez nationalized the petroleum industry in Venezuela. With ever increasing oil prices and new reserves that become harder to come by everyday, BQI would represent an attractive way to add to reserves and enter into Saskatchewan. China and other national oil companies could also step in.

Catalysts: 1) Oil above $100/bbl. Oil is currently trading in the low to mid $90’s right now. 2) TSX listing in 4Q07/1Q08 creating incremental Canadian equity analyst coverage. The stock is only covered by two analysts at Blackmont and Genuity, smaller brokerage firms. 3) Closure of Alberta Royalty Situation- if royalties are hiked in Alberta, it will hurt Encana and Suncor, but lead investors to Saskatchewan, where 90% of Oilsands Quest sands and shale are located. 4) SEC inclusion of oil sands and oil shale in reserve valuations will help create better disclosure and more interest among oil and gas companies, allowing for more M&A in the oil sand/shale space. 5) Norwest assessment/audit of reserves that will confirm management’s estimates.