Analysts Like The Long Term for Oilsands Quest

| About: Oilsands Quest, (OBQI)
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Shares of Oilsands Quest Inc. (BQI) fell more than 12% to US$5.57 on Monday after the company released an independent estimate of discovered resources for the Axe Lake discovery in northwest Saskatchewan. But plenty of optimism continues to surround the company’s prospects.

The Calgary-based explorer, which was previously alone in looking for oilsands potential in Alberta’s neighbor to the east, received a low estimate of 1.117 billion barrels of original bitumen in place and a high estimate of 1.547 billion.

Desjardins Securities analyst Adam Zive reiterated his “top pick” rating and US7$.50 price target on the company’s shares, which could also get a boost on Tuesday from a recommendation Monday from Jim Cramer, host of CNBC’s Mad Money.

Petrobank Energy and Resources Ltd. (PBG/TSX) recently announced that it acquired a 23,000-plus acre oilsands license in Saskatchewan. This has positive implications for Oilsands Quest, Mr. Zive told clients in a note, in part because Petrobank’s THAI technology may be useful for its lands. He believes the stock could rise above US$20 in the long term if commercial production levels are reached.

Blackmont Capital analyst Menno Hulshof reacted to the much-anticipated estimate by raising his price target on Oilsands Quest shares by US50¢ to US$7.25.

The results help validate the company’s internal estimate of 10 billion barrels for all of its permit lands, he said in a research note.

Mr. Hulshof believes some investors were waiting on the sidelines until this independent estimate was released and for the stock to be listed on the TSX, which he expects before the end of 2007.

“We believe this news should result in increased investor interest in Oilsands Quest over time,” he said.

BQI 1-yr chart: