8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 3, 2012

Oilsands Quest Inc.

(Exact name of registrant as specified in its charter)

Colorado	001-32994	98-0461154
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1333 - 8th Street SW Calgary, Alberta, Canada	T2R 1M6
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (403) 263-1623

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01.            Other Events.

On February 3, 2012, Oilsands Quest Inc. (the “Company”) issued a press release announcing that, subject to approval from the Alberta Court of Queen’s Bench (the “Court”), it has secured debtor-in-possession financing and entered into a purchase and sale agreement for its non-core Eagles Nest assets. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.  The press release is also available on the Company’s website at www.oilsandsquest.com.

Item 9.01.            Financial Statements and Exhibits.

(d)                  Exhibits.

Exhibit Number	Exhibit Description
99.1	Press Release dated February 3, 2012.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:  February 3, 2012	Oilsands Quest Inc.
	(Registrant)
	/s/ Garth Wong
	Name:	Garth Wong
	Title:	President and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number	Exhibit Description
99.1	Press Release dated February 3, 2012.

.

EX-99.1

EXHIBIT 99.1

CUSIP# 678046 10 3 NYSE Amex: BQI

NEWS RELEASE

DATE: February 3, 2012

Oilsands Quest Secures CDN$3.75 million Financing;

Agrees to Sell Non-Core Eagles Nest Asset for CDN$4.4 million

CALGARY, ALBERTA – Oilsands Quest Inc. (NYSE Amex: BQI) (“Oilsands Quest,” or “the Company”) has secured a commitment for debtor-in-possession ("DIP") financing of CDN$3.75 million (the "DIP Facility"), for the purposes of funding operating costs and other expenses while the Company proceeds with its previously-announced solicitation process while under creditor protection.

The DIP Facility is being provided by Century Services Inc. (the "DIP Lender") pursuant to the terms and conditions of a Commitment Letter dated February 1, 2012. The DIP Facility will be repayable on the earlier of one year following closing or the termination of the Order from the Alberta Court of Queen’s Bench (the “Court”) providing creditor protection under the Companies’ Creditors Arrangement Act (Canada) ("CCAA"). The DIP Facility is subject to the completion of definitive agreements and Court approval, which the company expects to obtain by February 16, 2012, after which advances under the DIP Facility will be available to Oilsands Quest.

Oilsands Quest has also entered into a purchase and sale agreement with an unrelated third-party entity to sell its non-core Eagles Nest asset for CDN$4.4 million. The purchaser has agreed to pay deposits of CDN$300,000 by February 21, 2012 with closing anticipated on or before March 23, 2012. The asset sale is also conditional on Court approval and normal closing conditions and adjustments. There can therefore be no assurance that the sale will be concluded.

The Eagles Nest prospect covers 22,773 acres (9,216 hectares) located in the Athabasca oil sands region northwest of Fort McMurray, Alberta. The property is geographically distant from Oilsands Quest’s other oil sands discoveries and largely unexplored. Resource estimates for the property are available on the Company’s website.

TD Securities Inc. acted as financial advisor to Oilsands Quest on the sale of Eagles Nest and, as previously disclosed, continues to assist the Company with the ongoing solicitation process.

Oilsands Quest continues to operate under the protection of CCAA with the assistance of a Court-appointed monitor. The Company’s common shares remain suspended from trading until either a delisting occurs or until the NYSE permits the resumption of trading.

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.

For more information:

Investor Relations

Email: ir@oilsandsquest.com

Investor Line: 1-877-718-8941

CUSIP# 678046 10 3 NYSE Amex: BQI

Forward-looking statements:

This news release includes certain statements that may be deemed to be “forward-looking statements,” including the expected date for obtaining court approval of the DIP Facility and the expected date for closing the sale of the Eagles Nest asset. All statements, other than statements of historical facts, included in this news release that address activities, events or developments that management expects, believes or anticipates will or may occur in the future are forward-looking statements.

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 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, its ability to successfully complete the previously announced solicitation process while under creditor protection, its ability to submit a timely plan to its stakeholders and the court under the CCAA and to resolve its operational, legal and financial difficulties, the possible delisting of its securities from NYSE Amex, risks inherent in the oil sands industry, regulatory and economic risks, land tenure risks and those factors listed under the caption “Risk Factors” in the Company’s Form 10-Q filed with the Securities and Exchange Commission on December 9, 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.