Oilsands Quest cancels $60 million rights offering

CALGARY, Sept. 12, 2011 /CNW/ --
CUSIP# 678046 10 3


NYSE Amex: BQI

CALGARY, Sept. 12, 2011 /CNW/ - Oilsands Quest Inc. (NYSE Amex: BQI)
('Oilsands Quest,' 'OQI' or 'the Company') has cancelled its $60
million rights offering that was to expire today, September 12.
Oilsands Quest is working with a third party on a potential transaction
that would change the Company's financial position and funding
requirements. The Company will consider whether to commence a new
rights offering once the outcome of the discussions with the third
party is clear.

All subscription payments received by the subscription agent under the
cancelled rights offering will be returned to OQI shareholders, without
interest. Shareholders who have questions about the administration of
the refunds of subscription payments can call Georgeson Inc., the
information agent, at 1-888-613-9988.

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, that address activities, events or developments that
OQI's 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;
    --  business strategies and development of the Company's business
        plan and drilling programs; and the Company's ability to
        maintain sufficient cash to accomplish its business objectives,
        including its ability to finalize and consummate the potential
        transaction with the third party and its ability to continue as
        a going concern.

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.

To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/September2011/12/c2541.html

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