oilsandsquestperkingup

As we continue to favor the nuclear renaissance over many other investment themes out there, we would
also like to revisit our favorite non-uranium companies: Oilsands Quest (BQI). The stock has been in a
strong uptrend over the past few months, in fact the stock has more than doubled off of its lows set in
July of this year.

This week the stock came under pressure as the company released the independent estimate of
resources at the Axe Lake Discovery Area. The numbers were quite bullish, however the stock came
under selling pressure due to the fact that the numbers were basically identical to what management had
previously predicted in their own estimate. What the independent estimate stated was that the Axe Lake
area probably possesses between (and this is the worst to best range) 1.117 billion barrels (low
estimate) and 1.547 billion barrels (high estimate) with the best estimate being 1.344 billion barrels. This
would seem to be extremely good news as the company is being valued at less than $1 per each of
these barrels which are classified as "Discovered Resources of Original Bitumen in Place".

Many are out there saying that this stock goes much higher if only Alberta would get its act together on
the issue of royalties as they pertain to oil sands, however on this project BQI only has 2 blocks in
Alberta and the rest, an overwhelming majority we might add, is located in the province next door,
Saskatchewan. Yes it is important to note that Oilsands Quest does have Eagles Nest which is located in
Alberta, however at this time it is not a focus of the company's drilling efforts so we find it hard to
understand the discount BQI is trading at.

With any kind of exploration company there are a few key points we like to investigate before an
investment is made as well as keep up-to-date while invested in the stock which has proven very
profitable for us. First we always like to look at what is next door, and the neighborhood is a very good
one in BQI's case as Suncor is located just West in Alberta with its Firebag Project. As a side note it is
hard to imagine why everyone thought that the bitumen stopped at the Alberta-Saskatchewan border
only a few years ago, it seems that they missed out big not only on the discovery but also on the cheap
land! The management team is probably the most important factor when working from the ground up on
a project such as this, and as the results prove this team is top-notch. Chris Hopkins has been here and
done it before and if we are correct in our assumptions he will do it once again. The flow of news is also
very important for us as we like to keep up on operations and the success or failure of ongoing
exploration programs. BQI has been the most successful exploration company that we have seen on a
percentage basis. They have consistently sported a 70%+ success rate on holes drilled hitting bitumen,
and this was in an area where everyone (including Suncor) had written off as being sub-par for further
exploration.

To date it seems that BQI has done no wrong and it would be very difficult for them to do wrong in the
future, however prices are rising for construction and equipment which would be necessary for future
production. Building the infrastructure is going to be expensive, but BQI still possesses 100% of these
exploration lands and most likely could structure a deal (maybe with the Chinese?) where they could
keep a carried interest (possibly in the 30% neighborhood) and have its partner provide the financing
and build the infrastructure in the area. This would allow BQI to continue with what it is good at, finding
bitumen. Last year the company reported that they were discovering a barrel at a cost between
$.02-$.03. That is amazingly cheap and one of the reasons the company has delayed bringing on a
partner at this point. The company is waiting for a big payday, either in cash or guarantees in
construction. I am betting that the company is talking to the Chinese, one of the Integrated Companies,
possibly Suncor, and less likely but also a possibility is a deal with India.

No matter the partner, we expect Management to make the best deal for shareholders and continue to
supply us with great news from the exploration front. In the next few months the news flow should pick up
providing further upwards pressure on the stock. We continue to believe in Oilsands Quest and shall
continue doing "more of that which is working, and less of that which is not".