Oilsands Quest Reports Success Ratio of 87% in Current Drilling Program on Oil Sands Exploration Permits in Saskatchewan

Oilsands Quest Reports Success Ratio of 87% in Current Drilling Program on Oil Sands Exploration Permits in Saskatchewan

Oilsands Quest Inc. reports that drilling results to date in its winter 2006/07 exploration program on its oil sands exploration permits in northwest Saskatchewan indicate an 87 percent success ratio. Between November 3, 2006 and January 15, 2007, a total of 31 holes were drilled and, of these, 27 were cored through bitumen-bearing McMurray formation.

“We are extremely pleased with our drilling results to date,” said Christopher H. Hopkins, President & Chief Executive Officer of Oilsands Quest Inc. “Our 24-hole drilling program last winter achieved an 80 percent success ratio, with 19 holes intercepting the bitumen-bearing McMurray formation. We have surpassed last winter’s success rate to a significant degree. In addition, our drilling to date covers a much larger area.”

The 31 core holes drilled to date (27 cored) in the current drilling program cover approximately 17 sections (one section equals one square mile) adjacent to the West Block drilled last year, where 17 holes (14 cored) tested an area of approximately seven sections. This winter’s drilling results to date demonstrate the continuation of Oilsands Quest’s original discovery over a total area of about 24 sections.

“We have growing confidence in the continuity of this resource,” said Mr. Hopkins. “Due to the extent of land covered with our drilling, its proximity to the original discovery and our consistent drilling success ratio, we have designated the discovery area plus additional prospective land associated with it as the Axe Lake Discovery.” The Axe Lake Discovery area represents about 13.6 percent of Oilsands Quest’s net permit lands.

This winter’s drilling program began on November 3, 2006 with a single drilling rig. Following the Christmas break, drilling resumed on January 4, 2007. At the present time, five core hole drilling rigs are at work. The company expects six rigs to be drilling by the end of January and eight rigs to be deployed by the end of February.

The company is making progress toward its goal to drill up to 100 delineation holes in the area of its original discovery; it will also shortly begin exploration drilling to the north and south of the Axe Lake Discovery. The company has drilling permits for up to another 150 exploratory holes this winter. Drilling progress has been slower than planned, however, due largely to tougher drilling conditions. “We are encountering numerous large boulders in the overburden in this area,” explained Mr. Hopkins. “As a result, it is now taking about five days to drill each hole compared to about three days per hole last year. To offset this effect, we are expanding the use of other exploration techniques.”

This winter, Oilsands Quest will undertake a seismic survey to identify drilling targets. In addition, the company has commissioned an airborne geophysical survey program for late January. The airborne survey will combine electro-magnetic and conventional magnetic surveys over a large area of Oilsands Quest’s exploration permits to provide valuable data to assist in the selection of drill hole locations.

The next update of Oilsands Quest’s exploration activities is planned for mid-February, when the company will again report the number of holes drilled, an indication of drilling success and the number of drilling rigs on site.

Oilsands Quest expects to be able to announce detailed information such as estimates of bitumen resource volumes, reservoir characteristics and alternatives regarding commercial potential by October 2007.

Oilsands Quest Inc. (formerly CanWest Petroleum Corporation) is conducting the province of Saskatchewan’s first major oil sands exploration program on its oil sands permits, which are located in northwest Saskatchewan, directly across the border from the Athabasca oil sands in Alberta. Oilsands Quest is focused on proving the extension of commercially viable deposits of oil sands from Alberta into Saskatchewan.

Forward-Looking Information

Except for statements of historical fact relating to the company, this news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may” or “will” occur. Forward-looking statements such as the references to Oilsands Quest Inc.’s drilling program, geophysical programs and timing of such programs are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those anticipated in the forward-looking statements, which include but are not limited to risks inherent in the oil sands industry, regulatory and economic risks, and risks associated with the company’s ability to implement its business plan. There are uncertainties inherent in forward-looking information, including factors beyond Oilsands Quest Inc.’s control, and no assurance can be given that the programs will be completed on time, on budget or at all. Oilsands Quest Inc. undertakes no obligation to update forward-looking information if circumstances or management’s estimates or opinions should change, except as required by law. The reader is cautioned not to place undue reliance on forward-looking statements. The risks and uncertainties set forth above are not exhausting. Readers should refer to Oilsands Quest’s current annual report on Form 10KSB, which is available at www.sedar.com and at www.sec.gov, for a detailed discussion of these risks and uncertainties and details regarding the location and extent of the Oilsands Quest permit lands.

Cautionary Note

Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: Except for historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties, including but not limited to economic, competitive, governmental and technological factors affecting the company’s operations, markets, products and prices, and including other factors discussed in Oilsands Quest Inc.’s various filings with the Securities and Exchange Commission.

CUSIP# 678046 10 3


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Source: Oilsands Quest Inc.

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