ALBERTA OILSANDS INC. ANNOUNCES "FLOW THROUGH" PRIVATE PLACEMENT FINANCING

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S./

CALGARY, Oct. 5 /CNW/ - Alberta Oilsands Inc. ("AOS" or the "Company") (AOS - TSXV) has entered into an agreement to raise a minimum of $5.0 million and a maximum of $7.5 million in a private placement financing (the "Private Placement").

PROFORMA Capital Inc. has agreed, subject to certain conditions, to subscribe, either directly or through an affiliate, for a minimum of 10,000,000 and a maximum of 15,000,000 units (the "Units") at a price of $0.50 per unit to the Private Placement.

Each Unit will consist of one common share of AOS issued on a "flow-through" basis and one half of a common share purchase warrant of AOS issued on a "flow-through" basis (a "Warrant"). Each whole Warrant will entitle the holder to acquire one common share from the Company at a price of $0.70 per Common Share at any time within 18 months after the closing date of the Private Placement.

The proceeds of the Private Placement will be used to incur eligible Canadian Exploration Expenses, as defined under the Income Tax Act (Canada), and will be renounced to the subscriber effective on or before December 31, 2010.

It is anticipated that the net proceeds will primarily be used to further delineate and define AOS's oil sands properties. The Company expects to embark on a program of delineation this winter with the objective of enhancing its reserves and resource base. "This financing provides us the capital to identify additional project areas which may eventually lead to multiple production avenues for our company," said Shabir Premji, Executive Chairman of AOS.

Closing is expected to occur in early or mid November, 2010 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange. Under the terms of the Private Placement the Company is required to pay a finder's fee of 5% of the gross proceeds of the financing upon closing of the Private Placement.

The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Forward-looking statements: This press release contains forward looking statements. More particularly, this press release contains statements concerning the anticipated closing date of the Private Placement and the anticipated use of the net proceeds of the Private Placement. Although AOS believes that the expectations reflected in these forward looking statements are reasonable, undue reliance should not be placed on them because AOS can give no assurance that they will prove to be correct. Since forward looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The closing of the Private Placement could be delayed if AOS is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned. The Private Placement will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the Private Placement will not be completed within the anticipated time or at all. The intended use of the net proceeds of the Private Placement by AOS might change if the board of directors of AOS determines that it would be in the best interests of AOS to deploy the proceeds for some other purpose.

The forward looking statements contained in this press release are made as of the date hereof and AOS undertakes no obligations to update publicly or revise any forward looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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For further information: Alberta Oilsands Inc., Suite 2800, 350 - 7th Avenue S.W., Calgary, Alberta, T2P 3N9, Shabir Premji, Executive Chairman, T: [phone], F: [phone], [email protected]; or Michael Lee, President, T: [phone], F: [phone], [email protected]; Company website: www.aboilsands.ca