$35,000,000 Offshore Well Longtom-3 Hits Deeper Gas Zone on ACOR's ORRI - Est. Total Gross Gas 2,165 Feet in Longtom Gas Field - Now Drilling Horizontally.

CISCO, Texas -- Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to report that the operator of VIC/P54 states that the wireline logging in the deviated pilot hole in the Longtom-3 well has been completed after the well reached a total depth of 11,433 feet measured depth. The Longtom-3 has successfully encountered approximately 52 feet of net gas sand at the targeted level within the Admiral Formation, some 869 feet deeper than the deepest gas intersection in Longtom-2, approx. 1/2 mile away. This paves the way for a horizontal well to be drilled through the Longtom gas sands on ACOR's ORRI.

The gas sand penetrated in the Longtom-3 pilot hole is thinner than was anticipated but this has been partially offset by the better than expected gas saturation. Initial indications of porosity and permeability in the gas sand are also encouraging.

This result at Longtom-3 has increased the total gross thickness of gas intersected in the Longtom Gas Field to approximately 2,165 feet, (there is still potential for deeper gas as a gas water contact was not observed in the well). The gas has been encountered in a series of independent reservoir units.

The Longtom 3 pilot hole suggests that the Admiral Formation reservoir sands are laterally continuous in the vicinity of the three wells drilled on the Longtom Gas Field to date as the sands can be correlated between all three wells.

The purpose of the Longtom-3 pilot hole was to accurately locate the deeper gas sands seen in Longtom-2 in order to facilitate well path planning of the horizontal production well. The Longtom-2 well intersected 96 meters of net gas sands over a gross interval of 260 meters. The lower reservoir section in Longtom-2 flowed at a stabilized rate of 18-19 mmcf/day over a 12 hour period -- an excellent result confirming the commercial potential of the previously untested lower reservoir section in Longtom. The shallower gas bearing sands seen in Longtom-1 and Longtom-2 were not anticipated to be gas bearing in the Longtom-3 pilot hole as they were expected to be intersected below the gas water contact at the well location.

The results of the well to date indicate that amplitude effects derived from seismic ("seismic anomalies") can be used to determine the quality and distribution of gas filled sands. The use of seismic anomalies is an important tool for optimally locating the Longtom-3 horizontal well and any future Longtom wells.

The pilot hole will now be plugged back in order for the horizontal well to be drilled laterally through the Longtom gas sands and tested as originally planned.

The Longtom-3 horizontal well will provide further important appraisal data in relation to the lateral distribution and quality of gas reservoirs in the Longtom field. The well is located in VIC/P54 on ACOR's ORRI, which consists of 155,676 gross acres located offshore Australia in the Gippsland Basin.

The well is being drilled utilizing the Ocean Patriot drilling rig.

Contract Signed with Santos to Sell 320 BCF of Gas on VIC/P54

ACOR is also pleased to announce that the operator of VIC/P54 has signed the Longtom Gas Sales and Toll Processing Agreement with Santos. The agreement will enable the operator of VIC/P54 to process and sell up to 350 BCF of gas over 12 years (with an option for additional 91 BCF of gas) from the Longtom Gas Field located in Bass Strait on ACOR's ORRI.

The gas from VIC/P54 will be processed through Santos existing Patricia Baleen facilities near Orbost in Victoria. The Longtom Gas Sales Agreement with Santos is conditional on the successful completion of the Longtom-3 appraisal well and the operator of VIC/P54 is confident that this will be achieved.

Upon a successful completion of Longtom-3, the first gas is anticipated to flow from the Longtom Gas Field by mid 2008.

The Longtom-3 well is a complex well and will cost approximately $35 million to drill and complete, roughly double the average cost of a Bass Strait (Gippsland Basin) well.

ACOR anticipates that the ORRI under VIC/P54 will prove to be a substantial resource capable of delivering significant long term cash flow and value for our shareholders.

ACOR owns a 1/20th of 1% ORRI under VIC/P54.

About Australian-Canadian Oil Royalties Ltd.:

ACOR management draws no cash salary. ACOR has NO LONG-TERM DEBT. ACOR's principal assets consist of 15,440,116 gross surface acres of overriding royalty interest and 8,561,007 gross acres of working interests, located Onshore Australia in the Cooper-Eromanga Basin and Offshore Australia in the Gippsland Basin in the Bass Strait.

ACOR is a publicly traded oil company trading on the NASDAQ OTC Bulletin Board Exchange under the trading symbol "AUCAF."

Summary:

Australia is a "hot spot" for oil & gas exploration and ACOR is positioned for possible "Company-Maker" discoveries. ACOR's working interests and overriding royalty interests are located offshore & onshore in the best producing basins.

Visit our website at www.aussieoil.com.

Disclaimer:

Except for historical information contained herein, the statements released are forward-looking statements that are made pursuant to the provision of the Private Securities Litigation Reform Act of 1955. Forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to differ materially from forecasted results. Such risks and uncertainties include, but are not limited to, market conditions, competitive factors, the ability to successfully complete additional financings and other risks.