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) May 23, 2008

Oilsands Quest Inc.

(Exact name of registrant as specified in its charter)

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

205, 707– 7th Avenue S.W. Calgary, Alberta, Canada	T2P 3H6
(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):

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

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

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

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

Item 3.02 Unregistered Sales of Equity Securities.

On May 23, 2008, the Company closed on the sale of 12,976,761 shares of common stock at a price of US$4.20 per share for gross proceeds of approximately US$54.5 million. The offering was conducted through a syndicate of agents with TD Securities Inc. serving as the lead agent. In connection with the offering, the Company paid an aggregate of US$1,225,120 in fees to the Agents pursuant to the terms of the Agency Agreement.

The common stock was sold to non U.S. persons pursuant to Regulation S under the Securities Act of 1933, as amended (the “Securities Act”). The shares of common stock have not been registered under the Securities Act and may not be offered or sold absent a registration statement or an applicable exemption from registration.

Item 8.01 Other Events.

On May 23, 2008, the Company issued a press release announcing the closing of the private placement. The press release is filed as Exhibit 99.1 to this report and is incorporated by reference herein.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release dated May 23, 2008.

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.

	Oilsands Quest Inc.      (Registrant)
Date: May 30, 2008	/s/ Karim Hirji
	Name:	Karim Hirji
	Title:	Chief Financial Officer

Exhibit Index

Exhibit
Number	Description
99.1	Press Release dated May 23, 2008.

EX-99.1

Exhibit 99.1

CUSIP# 678046 10 3
Amex: BQI

NEWS RELEASE

Date: May 23, 2008

Oilsands Quest announces closing of private placement

Calgary, Alberta — Oilsands Quest Inc. (Amex: BQI) announced today the completion of its previously-announced private placement in which funds managed by Sprott Asset Management Inc. have purchased 11,904,761 Oilsands Quest common shares at a price of US$4.20 per share for total gross proceeds to Oilsands Quest of approximately US$50 million. In addition, a number of other accredited investors participated for another US$4.5 million at the same price per share, resulting in a total of 12,976,761 common shares issued and total gross proceeds of approximately US$54.5 million.

The private placement was made by a syndicate of agents bookrun by TD Securities Inc. and including Genuity Capital Markets, CIBC World Markets Inc., Blackmont Capital Inc., Canaccord Capital Corporation, Lehman Brothers Canada Inc. and RBC Dominion Securities in Canada and their respective U.S. registered broker dealer affiliates. The proceeds of the private placement will be used for general corporate and other operational purposes. Specific allocations of the proceeds for such purposes have not been made at this time. The common shares issued pursuant to this Offering have not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”).

About Oilsands Quest

Oilsands Quest Inc. (www.oilsandsquest.com) is aggressively exploring Canada’s largest holding of contiguous oil sands permits and licences, located in Saskatchewan and Alberta, and developing Saskatchewan’s first global-scale oil sands discovery. It is leading the establishment of Saskatchewan’s emerging oil sands industry.

Forward-looking Information

This news release contains certain “forward-looking information” within the meaning of applicable securities law. Forward-looking information is 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 and includes statements in this release relating to allocation of the proceeds of the offering. 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. These risks, uncertainties and other factors include, but are not limited to, exploration and technical risks inherent in the oil sands industry, regulatory and economic risks, lack of infrastructure in the region in which the company’s resources are located and risks associated with Oilsands Quest’s ability to implement its business plan. The reader is cautioned not to place undue reliance on forward-looking statements. The risks and

CUSIP# 678046 10 3
Amex: BQI

2.

uncertainties set forth above are not exhaustive. Readers should refer to Oilsands Quest’s current annual report on Form 10-KSB and other periodic and current reports, which are available at www.sec.gov and www.sedar.com for a detailed discussion of these risks and uncertainties.

For more information:

General inquiries and retail investors, contact
Hedlin Lauder Investor Relations Ltd.
Toll Free 1-800-299-7823
Office 403-232-6251
Email irinfo@hedlinlauder.com

Institutional investors, contact
BarnesMcInerney Inc.
Toll Free 1-866-794-7288
Office 416-371-0510
Email oilsands@barnesmcinerney.com