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) March 1526, 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
800, 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 1.01.

Entry Into Material Definitive Agreement.

On March 1226, 2012, ~~Township Petroleum Corporation, an Alberta corporation and wholly owned subsidiary of~~ Oilsands Quest Inc. (“Oilsands” or the “Company”), ~~entered~~a ~~into~~corporation anincorporated ~~asset~~pursuant ~~purchase~~to ~~and~~the ~~sale~~laws ~~agreement~~of (the ~~“Purchase~~State ~~and~~of ~~Sale~~Colorado, ~~Agreement”~~and orits ~~the~~subsidiaries, ~~“PSA”)~~Oilsands ~~with~~Quest ~~Cavalier~~Sask ~~Energy~~ Inc., anOilsands ~~Alberta~~Quest ~~Corporation~~Technology ~~(the “Purchaser”)~~Inc., ~~for~~1291329 ~~the~~Alberta ~~sale~~Limited, ofStripper ~~Alberta~~Energy ~~Lease~~Services NoInc. ~~7405080355~~, ~~the~~Township ~~assets~~Petroleum ~~described~~Corporation, inWestern ~~the~~Petrochemicals ~~Company’s~~Corp., ~~filings~~and ~~with~~1259882 ~~the~~Alberta ~~Securities~~Ltd., ~~and~~each ~~Exchange~~a ~~Committee~~corporation asincorporated pursuant to the ~~“Eagles~~laws ~~Nest~~of ~~Prospect”~~the orProvince ~~“Eagles~~of ~~Nest”~~Alberta, (the “~~Asset~~Subsidiaries”). ~~The~~and ~~Company~~together ~~had~~with ~~reopened~~ the ~~sales~~Company, ~~process for~~ the ~~Asset~~“Borrowers”) ~~after~~entered ~~FAMA~~into ~~Capital~~a ~~Ltd.~~loan ~~defaulted~~agreement, on(the an“Loan ~~earlier~~Agreement”) ~~Purchase~~with ~~and~~Century ~~Sale~~Services, ~~Agreement~~L.P, ~~The PSA was finalized in~~ a ~~short~~ limited ~~bidding~~partnership ~~process~~formed ~~directed~~under by the ~~Alberta~~laws ~~Court~~ of ~~Queen’s Court (~~the ~~“Court”)~~Province ~~under~~of ~~the~~Alberta ~~Companies’ Creditors Arrangement Act~~ (~~Canada) (~~the “~~CCAA~~Lender”). ~~The Court approved the PSA on March 15, 2012, upon which the PSA became an enforceable obligation of the Company.~~

The ~~PSA~~Loan Agreement provides for ~~the~~debtor-in-possession ~~sale~~financing ofin the ~~Asset~~maximum ~~for~~amount ~~a purchase price~~ of CDN$~~7,005,000~~2.85 million (the “~~Purchase~~DIP ~~Price~~Facility”), ~~including~~which athe ~~CDN$700,500~~Company ~~deposit~~was ~~paid~~authorized onand ~~March~~empowered ~~12,~~to ~~2012,~~enter ~~not~~into ~~including~~by ~~GST~~the orInitial ~~land~~Order ~~transfer~~as ~~taxes.~~amended ~~Such~~by ~~taxes~~the ~~are~~Order ~~payable~~issued by the ~~Purchaser~~Court inof ~~addition~~Queen's toBench of Alberta, Judicial District of Calgary (the ~~Purchase~~“Court”) ~~Price.~~on ~~The~~February ~~PSA~~16, is2012. The ~~expected~~DIP toFacility ~~close~~will terminate on orthe ~~before~~earlier of March 2326, ~~2012~~2013 or the termination of the Order from the Court providing creditor protection under the Companies’ Creditors Arrangement Act (Canada) (“CCAA”).

The ~~PSA~~DIP ~~provides~~Facility ~~for~~is ~~access~~a non-revolving, ~~subject~~debtor-in-possession toterm ~~contractual~~loan ~~restrictions~~facility ~~relating~~which toshall ~~disclosure~~be advanced in a single advance. The DIP Facility has a final maturity date of March 26, ~~all~~2013 ~~technical~~and ~~data~~the ~~relating~~Borrowers tohave the ~~Asset~~right ~~that~~to ~~are~~permanently ~~reasonably~~repay ~~required~~the DIP Facility in ~~connection~~full ~~with~~at any time after the ~~PSA.~~three ~~The~~month ~~PSA~~anniversary isof ~~subject~~the todate ~~ordinary~~on ~~closing~~which ~~conditions~~the ~~and~~funds are first advanced. Interest shall be calculated at the ~~obtaining~~rate of ~~all~~sixteen ~~necessary~~percent ~~governmental~~(16%) per annum on the daily balance outstanding under the DIP Facility. Interest shall be calculated monthly in arrears, before and after maturity, default or ~~regulatory~~judgment, ~~approvals~~with ~~for~~interest on overdue interest calculated in the ~~sale~~same ofmanner at any time on the ~~Asset~~daily balance outstanding at the same rate based on the actual number of days lapsed divided by 365.

~~This~~Under ~~summary~~the ofLoan ~~the~~Agreement, ~~PSA~~certain isfees ~~qualified~~are inassociated ~~its~~with ~~entirety~~having byentered ~~reference~~into the DIP Facility: a facility fee equal to CDN $75,000 upon entry into the ~~PSA~~Loan Agreement; commencing on the date funds are first advanced, athe ~~copy~~Lender shall earn an amount of ~~which~~interest ison ~~attached~~the loan amount at least equal to ~~this~~CDN ~~Current~~$85,500 ~~Report~~(the “Minimum Fee”), and if such amount is not earned on ~~Form~~or ~~8-K~~before asthe ~~Exhibit~~expiry ~~10.1~~of three months, or the payment in full of the DIP Facility, the balance owing on the account of the Minimum Fee shall be added to the loan amount; and, isthe ~~incorporated~~Lender ~~herein~~shall byalso ~~reference~~pay the Borrower CDN $7,500 (the “Monitoring Fee”), quarterly in arrears.

The Loan Agreement contains customary representations and warranties, pre-conditions to the initial advance of funds under the DIP Facility and events of default.

This summary of the Loan Agreement is qualified in its entirety by reference to the Loan Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.

Item 8.01.

Other Events.

On March 1527, 2012, the Company issued a press release announcing that it ~~received~~closed ~~approval~~the ~~from~~Eagles Nest asset sale, signed the ~~Court~~Loan ~~for~~Agreement relating to the ~~Purchase~~DIP Facility and ~~Sale~~received ~~Agreement~~approval for settlement of the ~~Asset~~Make a Difference Foundation, Inc. v. Hopkins, et al., derivative law suit. 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
10.1	~~Purchase~~Loan ~~and Sale~~ Agreement dated March 1226, 2012
99.1	Press Release dated March 1527, 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: March 20, 2012	Oilsands Quest Inc. (Registrant)
Date: March 28, 2012	Oilsands Quest Inc. (Registrant)
	By:	/s/ Garth Wong
		Name:	Garth Wong
		Name: Garth Wong
		Title:	President and Chief Executive Officer
		Title: President and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number	Exhibit Description
10.1	~~Purchase~~Loan ~~and Sale~~ Agreement dated March 1226, 2012
99.1	Press Release dated March 1527, 2012.

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