Oilsands Quest Receives Court Approval of Financing and CCAA Extension; Receives New Higher Bid for Non-Core Eagles Nest Asset

Oilsands Quest Inc.

has received Court approval of its previously-announced DIP financing and its request to extend creditor protection. Court approval of the announced sale of the Company's Eagles Nest asset has been delayed, because a second party has come forward with a substantially higher offer for the asset. The Alberta Court of Queen's Bench approved Oilsands Quest's debtor-in-possession financing of CDN$3.75 million, to fund ongoing operating costs and other expenses while the Company is under creditor protection. Advances under the DIP facility are now available to the Company. Oilsands Quest also requested and obtained an extension of the order providing creditor protection under the Companies' Creditors Arrangement Act (Canada), which was to expire February 17, 2012. Creditor protection under the CCAA will now expire May 18, 2012, unless further extended as required and approved by the Court. Oilsands Quest previously stated that it would request Court approval for the sale of its Eagles Nest property to an unrelated third party for CDN$4.4 million. However, on February 15, 2012, the Company received an additional offer to purchase the Eagles Nest property from another third party. Under this new offer, the buyer would pay CDN$6 million for the asset, with a non-refundable deposit of CDN$400,000. In light of the late offer, the Court delayed its decision on the asset sale until February 22, 2012, to allow time for the new offer to be evaluated fully and for any additional prospective bidders to come forward.