Source: Burstall Winger Zammit LLP

Alberta Oilsands Inc. Responds to Smoothwater Capital Corporation and Announces Postponement of Annual General Meeting

CALGARY, ALBERTA--(Marketwired - Aug. 23, 2016) -

NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Alberta Oilsands Inc. ("AOS" or the "Corporation") (TSX VENTURE:AOS) wishes to clarify certain allegations made by Smoothwater Capital Corporation ("Smoothwater"), as well as provide an update on the annual general meeting of the Corporation originally scheduled for September 23, 2016.

SMOOTHWATER ALLEGATIONS

On August 21, 2016, Smoothwater issued a press release expressing their disapproval of the Corporation's acquisition of Marquee (the "Smoothwater Press Release"). In that press release Smoothwater made a number of inaccurate and inappropriate comments and allegations that AOS wishes to correct.

1. Incorrect allegations that a shareholder vote is mandated by law

Smoothwater seeks to rewrite Canadian corporate law to serve its own purposes. The proposed transaction with Marquee involves a plan of arrangement of Marquee and Marquee shareholders, where AOS will issue 1.67 AOS shares for each Marquee share outstanding. Under the proposed transaction, AOS is an issuer of shares and not the party being arranged, which is Marquee. Neither the Business Corporations Act (Alberta) nor any other Canadian corporate law requires a shareholder vote for an acquiror issuing shares in such a transaction, contrary to what Smoothwater has alleged.

In certain circumstances, public companies may be required by applicable stock exchanges to seek a shareholder vote, such as where the transaction results in a new control person being created. Those circumstances do not exist in the proposed transaction. AOS has had discussions in good faith, with full disclosure of all material information (including Smoothwater's opposition to any value-generating transaction) with applicable regulators prior to announcing the proposed transaction in arriving at the conclusion that an AOS shareholder vote is not required.

2. Comments attributed to the CEO and Chairman of AOS regarding holding a shareholder vote

In the Smoothwater Press Release, Smoothwater blatantly stated that the Chair and CEO of AOS had stated that any transaction with Marquee would be taken to AOS shareholders for approval. This is not true. Smoothwater neglected to disclose that discussions between AOS and Smoothwater were held prior to the announcement of the proposed transaction for the express purpose of AOS negotiating a confidentiality agreement with Smoothwater to discuss in detail the proposed transaction. As such negotiations continued, it became apparent to AOS that Smoothwater was only purporting to entertain the prospect of entering into a confidentiality agreement for the purpose of securing contractual terms that would amend the legal requirements applicable to any transaction, would reimburse Smoothwater for its costs at the expense of AOS and other shareholders, and would provide Smoothwater with a right to pre-disclose AOS' negotiations with Marquee, thereby putting a value-generating transaction at risk. As a result, AOS had no option but to cease negotiations with Smoothwater as terms of a mutually satisfactory confidentiality agreement could not be reached.

Smoothwater has taken comments in the context of a negotiation of a confidentiality agreement, and spun them for its own self-serving purpose.

3. Smoothwater seeks to continue to speak for Shareholders that Disagree with its Position

The Smoothwater Press Release implies greater support for its so-called "Capital Dividend Plan" than actually exists. In addition, Smoothwater's website continues to misrepresent to the public that a significant shareholder supports its short-term profit-taking proposal, when this is no longer correct.

In particular, a large shareholder of AOS and shareholder of Marquee, Mr. Bruce Mitchell, who based on the Smoothwater Press Release is known by Smoothwater to support the proposed transaction with Marquee, has sent a letter of clarification to Smoothwater containing the following:

"As you are aware from public disclosure, I am a large significant shareholder of Alberta Oilsands Inc. ("AOS"). As disclosed in the joint news release of AOS and Marquee Energy Ltd. ("Marquee") dated August 19, 2016, I am fully supportive of the proposed acquisition of Marquee by AOS.

You and I have had prior discussions concerning the so-called "Capital Dividend Plan" for AOS as being advanced by Smoothwater and another individual shareholder with whom Smoothwater is acting jointly and in concert, a proposal of which I was formerly supportive. However, upon agreeing to a standard form confidentiality agreement with AOS and Marquee, my discussions with AOS and Marquee have demonstrated the value which I believe will be unlocked for all AOS shareholders as a result of the proposed acquisition. I would encourage Smoothwater to also consider the possibility that the proposed transaction is financially superior to AOS shareholders relative to a short-term arbitrage play.

Having regard to my support of the transaction, I would respectfully request that Smoothwater remove all references to my name or correspondence from its website and future public communications, unless such references correctly refer to my support of the transaction. I fear it is a misrepresentation to the public to continue to refer to my prior position prior to the arrival of the Marquee transaction. I would ask that Smoothwater also relay my views to others with whom it is acting jointly and in concert."

As with Mr. Mitchell, the AOS board of directors supports the proposed Marquee transaction. The AOS board believes the transaction to be in the best interests of the Corporation, and based in part upon the opinion of its financial advisor, has determined that the consideration to be paid by AOS to Marquee shareholders pursuant to the arrangement is fair, from a financial point of view, to AOS shareholders. Mr. Mitchell has agreed to support the transaction and will be voting for the Arrangement at the Marquee shareholder meeting and will be supportive of AOS directors at the next annual meeting of AOS.

4. Smoothwater has even mischaracterized minor legal requirements to try to influence shareholders

Smoothwater alleges that AOS has failed to file its agreement with Marquee as required by law. This is not true. Such agreement must, and will, be filed no later than the deadline for AOS filing a material change report in respect of the proposed transaction. AOS will comply with its legal obligations in this regard.

5. Smoothwater is looking out for its own best interest and not the best interest of ALL shareholders

AOS believes that Smoothwater is trying to use the press to advance its own interest. The AOS board has been actively seeking to maximize shareholder value for ALL AOS shareholders since December 2014 and believes that the transaction with Marquee is in the best interest of the Corporation and its shareholders. The AOS board will not be influenced by a shareholder that has refused to enter into a standard confidentiality agreement and evaluate in good faith the proposed transaction.

POSTPONEMENT OF AOS ANNUAL GENERAL MEETING

On August 22, 2016, AOS received from Smoothwater a notice of nomination of five directors at AOS' next annual general meeting, which differs from Smoothwater's prior requisition of a shareholder meeting to replace three AOS directors. AOS is evaluating the new Smoothwater notice.

In order to close the proposed Marquee transaction in an orderly fashion, and to give all AOS shareholders the opportunity to be well informed of all that is occurring at AOS with respect to the new board resulting from the Marquee transaction, AOS has determined to postpone the previously requisitioned annual general meeting ("AGM") that was called in response to the requisition by Smoothwater scheduled for September 23, 2016, to November 15, 2016. AOS has received an order from the Court of Queen's Bench Alberta extending the date in which it could hold its AGM.

ABOUT ALBERTA OILSANDS

Alberta Oilsands holds bitumen leases in the Athabasca oil sands region of northeast Alberta. The Corporation's head office is located in Calgary, Alberta, Canada and its common shares are traded on the TSX Venture Exchange under the trading symbol "AOS".

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.

Certain statements included in this press release constitute forward-looking statements or information ("forward-looking statements") under applicable securities legislation. Forward-looking statements or information typically contain statements with words such as "anticipate", "believe", "expect", "plan", "intend", "estimate", "potential", "propose", or similar words suggesting future outcomes or statements regarding an outlook. Specific forward-looking statements in this press release include statements with respect to the anticipated actions of certain shareholders of the Corporation and the timing of the Corporation's filings.

Forward looking statements involves significant known and unknown risks and uncertainties, some of which are beyond the control of AOS, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to, business plans and expectations, the ability of the Corporation to consummate the contemplated transactions, the impact of general economic conditions, industry conditions, volatility of commodity prices, environmental risks, competition from other industry participants and the lack of availability of qualified personnel or management. Additional risks and uncertainties affecting AOS and its business and affairs are described in further detail in the Corporation's management's discussion and analysis of financial condition and results of operations for the period ended March 31, 2016.

Although AOS believes that the expectations in such forward-looking statements are reasonable, they are based on factors and assumptions concerning future events which may prove to be inaccurate. Those factors and assumptions are based upon currently available information. Such statements are subject to known and unknown risks, uncertainties and other factors that could influence actual results or events and cause actual results or events to differ materially from those stated, anticipated or implied in the forward-looking statements. As such, readers are cautioned not to place undue reliance on the forward-looking statements, as no assurance can be provided as to future results, levels of activity or achievements. The forward looking information included herein is made as of the date of this press release and AOS assumes no obligation to update or revise any forward looking information to reflect new events or circumstances, except as required by law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

Contact Information:

Binh Vu
Interim CEO & President
+1 416 951 8800
bvu@aboilsands.ca