Oilsands Quest Inc. extends $60 million rights offering to September 12, 2011

CALGARY, Aug. 26, 2011 /CNW/ --
CUSIP# 678046 10 3


NYSE Amex: BQI

CALGARY, Aug. 26, 2011 /CNW/ - Oilsands Quest Inc. (NYSE Amex: BQI)
('Oilsands Quest,' 'OQI' or 'the Company'), announced today that it is
extending its ongoing subscription rights offering originally announced
on July 18, 2011 (the 'Rights Offering') to September 12, 2011 at 5:00
p.m. Eastern Daylight Time (EDT). Holders of the subscription rights
will now have until this extended date to exercise their rights or
deliver a notice of guaranteed delivery. The Rights Offering was
initially scheduled to expire on August 15, 2011 and it was then
extended to August 26, 2011.

The Rights Offering has been extended to offer shareholders additional
time to consider participation in the Rights Offering because some
shareholders received the information packages about the Rights
Offering later than expected. The Company is committed to ensure that
its shareholders have adequate time to consider and participate in the
offering. While the recent volatile market conditions have impacted the
share prices of oil sands companies, OQI remains confident in the value
that the Rights Offering presents to investors.

As previously announced, each holder of Oilsands Quest's common stock as
of the record date of July 28, 2011 received 0.816 subscription rights
per share held for a total of 300,000,000 rights. The rights can be
exercised at $0.20 per full share of common stock of Oilsands Quest
Inc. Other than the new expiration date for the Rights Offering, all of
the offering terms described in Oilsands Quest's prospectus supplement
dated July 20, 2011 remain the same and apply during the extended
period of the offering.

This news release does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be any
sale of these securities in any state or jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration of
qualification under the securities laws of any such state or
jurisdiction.

Oilsands Quest has filed a registration statement (including a
prospectus) with the SEC for the Rights Offering. Shareholder should
read the prospectus in that registration statement and other documents
the Company has filed with the SEC for more complete information about
the Company and this Rights Offering. The documents are available free
of charge by visiting EDGAR on the SEC website at www.sec.govd.

For a copy of the prospectus, shareholders may contact Georgeson, Inc.,
the information agent for the rights offering at (888) 613-9988
(toll-free) or the Oilsands Quest investor information line at (877)
718-8941 (toll-free).

About Oilsands Quest

Oilsands Quest Inc. (www.oilsandsquest.com) is exploring and developing oil sands permits and licences, located in
Saskatchewan and Alberta, and developing Saskatchewan's first
commercial oil sands discovery.  It is leading the establishment of the
province of Saskatchewan's emerging oil sands industry.

Forward-looking statements:

This news release includes certain statements that may be deemed to be
'forward-looking statements.' All statements, other than statements of
historical facts, included in this news release that address
activities, events or developments that our management expects,
believes or anticipates will or may occur in the future are
forward-looking statements. Such forward-looking statements include
discussion of such matters as:

    --  the Company's plans to raise additional capital;

    --  implementation of the Company's business plan;

    --  the amount and nature of development and exploration
        expenditures;

    --  the timing of exploration and development activities;

    --  potential reservoir recovery optimization processes; and

    --  business strategies and development of our business plan and
        drilling programs.

Forward-looking statements are statements other than relating to
historical fact and are frequently characterized by words such as
'plan', 'expect', 'project', 'intend', 'believe', 'anticipate',
'estimate', 'potential', 'prospective' and other similar words or
statements that certain events or conditions 'may' 'will' or 'could'
occur. Forward-looking statements such as references to Oilsands
Quest's drilling program, geophysical programs, reservoir field testing
and analysis program, preliminary engineering and economic assessment
program for a first commercial project, and the 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 the
ability to raise additional capital, risks associated with the
Company's ability to implement its business plan, risks inherent in the
oil sands industry, regulatory and economic risks, land tenure risks,
lack of infrastructure in the region in which the company's resources
are located, risks associated with the Company's ability to implement
its business plan and those factors listed under the caption 'Risk
Factors' in the Company's 10K/A filed with the Securities and Exchange
Commission (the 'SEC') on July 8, 2011 and the prospectus supplement
filed with the SEC on July 20, 2011.  The Company 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.

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Investor Relations
Email: ir@oilsandsquest.com
Investor Line: 1-877-718-8941