Y, May 17 /PRNewswire/ - Oilsands Quest Inc. (NYSE Amex: BQI) ("Oilsands Quest," "OQI" or "the Company") today released new independent resource estimates for its Wallace Creek property, which support the Company's view that Wallace Creek has the potential to support a 30,000 barrel-per-day commercial oil sands project. The estimates were prepared by McDaniel & Associates Consultants Ltd. ("McDaniel"), at the request of Oilsands Quest with an effective date of April 30, 2011.

The independent resource estimates include the results of OQI's recently completed five-well drilling program at Wallace Creek. The drilling focused on the western side of the Wallace Creek permit, which is adjacent to Cenovus' Telephone Lake and Grizzly Oil Sands' Firebag project areas.

Two of the wells drilled encountered significant quantities of bitumen in the McMurray formation to support a 16 per cent increase in the Wallace Creek contingent resource estimates. The previously-announced 11 well winter drilling program was condensed to five wells primarily due to the limited availability of drilling rigs.

"We are confident in the future development potential of Wallace Creek," said Simon Raven, Oilsands Quest Vice-President of Exploration and Development. "Based on the results from this year's drilling, we continue to believe that this area has the potential to be our second commercial development, following Axe Lake."

In determining the resource estimates, McDaniel has assumed the use of Steam Assisted Gravity Drainage ("SAGD") as the recovery process. SAGD is a well-established technology used extensively to produce oil sands in the region. Oilsands Quest is continuing to advance reservoir testing programs and anticipates that a portion of the resources currently classified as sub-economic contingent and unrecoverable will eventually be reclassified as economic contingent resources. At this time, only a portion of the contingent resources assigned by McDaniel have been sub-classified as economic. Definitions of the resource categories used for the estimates and other technical terms are set out at the end of this news release.

The following evaluation by McDaniel of OQI's Wallace Creek property is based upon fourteen core holes drilled in the winter drilling seasons of 2010 and 2011.

Table 1
Wallace Creek Bitumen Resource Estimates

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Millions of Barrels Low Best High
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Discovered Resources(2) 267 345 425
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Contingent Resources(1)(3) 75 114 177
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Undiscovered Resources(2) 331 597 1,069
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Prospective Resources(2) 34 178 539
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Please see http://www.oilsandsquest.com/our_projects/wallace_creek_map.html to view a map showing the western half of the Wallace Creek permits, with McDaniel's current interpretation of the extent and contours of the oil sands reservoir. Additional seismic and drilling activity is planned over the next two winter seasons to fully delineate the reservoir.

The resource estimates for the Axe Lake, Raven Ridge and Eagles Nest properties have not been updated from the previous evaluations at April 30, 2010.

Table 2
Axe Lake Bitumen Resource Estimates
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Millions of Barrels Low Best High
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Discovered Resources(2) 1,398 1,865 2,331
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Contingent Resources(1)(3) n/a 152 474
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Table 3
Raven Ridge Bitumen Resource Estimates
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Millions of Barrels Low Best High
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Discovered Resources(2) 760 1,013 1,267
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Contingent Resources(1)(3) n/a n/a 320
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Undiscovered Resources(2) 245 673 1,755
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Prospective Resources(2) 10 136 565
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Table 4
Eagles Nest Bitumen Resource Estimates
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Millions of Barrels Low Best High
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Discovered Resources(2) 221 367 612
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Undiscovered Resources(2) 926 1,573 2,682
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Prospective Resources(2) 18 178 717
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Table 5
Summary of Bitumen Resource Estimates
Axe Lake, Raven Ridge, Wallace Creek & Eagles Nest(4)
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Millions of Barrels Low Best High
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Discovered Resources(2) 2,646 3,590 4,635
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Contingent Resources(1)(3) 75 266 971
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Undiscovered Resources(2) 1,502 2,843 5,506
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Prospective Resources(2) 62 492 1,821
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(1) Includes estimates of sub-economic contingent resources reported by
McDaniel.
(2) The discovered resource and undiscovered resource numbers are not
estimates of the recoverable volume of bitumen. A portion of the
discovered resources tabulated herein have been further categorized
as contingent resources in the McDaniel evaluation. In addition, a
portion of the undiscovered resources tabulated herein have been
further categorized as prospective resources in the McDaniel
evaluation. The portion of the discovered resources and undiscovered
resources that have not been classified respectively as contingent
resources or prospective resources would be categorized under COGEH
as unrecoverable at this time, pending further testing and recovery
process development. There is no certainty that it will be
commercially viable to produce any portion of the discovered
resources. There is no certainty that any portion of the undiscovered
resources will be discovered and, if discovered, there is no
certainty that it will be commercially viable to produce any portion
of the resources.
(3) The low estimate contingent resources for Axe Lake and Raven Ridge
and a portion of the low estimate contingent resources at Wallace
Creek have been sub-classified as sub-economic under McDaniel's
current price forecast and cost assumptions. There is no certainty
that it will be commercially viable to produce any portion of the
contingent resources. The recoverable volumes estimated by McDaniel
have been classified as contingent resources as opposed to reserves
because not all of the conditions for commerciality have been met
including corporate and regulatory approvals for development. The
estimates of contingent resources have been prepared assuming the
use of SAGD as the recovery process.
(4) The table sets out OQI's discovered resource estimates for Axe Lake,
Raven Ridge, Wallace Creek and Eagles Nest; economic contingent
resource estimates for Axe Lake, Raven Ridge and Wallace Creek;
undiscovered resource estimates for Raven Ridge, Wallace Creek and
Eagles Nest; and prospective resource estimates for Raven Ridge,
Wallace Creek and Eagles Nest.