2 Rigs - 3 Wells Drilling Back-to-Back on ACOR's PEL 100 & 88.

CISCO, Texas -- Australian-Canadian Oil Royalties Ltd. ("ACOR") (OTCBB:AUCAF) is pleased to announce the Operator of Petroleum Exploration License ("PEL") 88 & PEL 100, located in the State of South Australia, has secured two drilling rigs for drilling three Cooper Basin wells on PEL 88 and PEL 100. The Drilling Program began on PEL 100 with the drilling of Fairbridge 1, which commenced on December 26, 2005, and is expected to take 18-23 days to drill and evaluate. The Fairbridge 1 is being drilled by the Ensign Drilling Rig #30 to a projected total depth (TD) of 2,672 meters. The Operator estimates the undiscovered possible reserves for the Fairbridge Prospect at approximately 3.7 million barrels of oil for one of two culminations on the structure.

Adjoining PEL 88 to the north and PEL 100 to the east are the Keleary and Telopea Oil Fields. The Keleary Oil Field has produced in excess of 1,545,000 barrels of oil. The Keleary Oil Field encountered four commercial zones in three separate formations (Basal Birkhead/Hutton, Poolowanna and Tinchoo Formations), while the Telopea Oil Field encountered commercial oil in the Tinchoo Formation.

Immediately following Fairbridge 1, the Operator will drill the Strickland Bay Prospect on PEL 100, which has estimated undiscovered possible reserves of approximately 3.1 million barrels of oil.

ACOR was pleased to report that the Operator has secured a second rig which, in parallel with drilling the Strickland Bay-1 Well on PEL 100, the operator will also drill the Geordie well on PEL 88, which has estimated undiscovered possible reserves of approximately 5.1 million barrels of oil.

An example of ACOR's earnings potential is as follows: The Fairbridge Prospect is drilling a possible look-a-like structure to the adjoining Keleary Oil Field. The Keleary-2 well had an initial potential of 6,000 barrels of oil per day.

ACOR owns 3/10ths of 1% ORRI under PEL 88.

ACOR owns 2% Working Interest under PEL 100.

About Australian-Canadian Oil Royalties Ltd.

ACOR management draws no cash salary. ACOR has NO LONG-TERM DEBT.

ACOR's principal assets consist of 15,293,450 gross surface acres of overriding royalty interest and 8,900,776 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." On January 4, 2006 the Company's common stock opened at 27 cents trading as high as $1.23 and closed at 88 cents.

Summary

Australia is a "hot spot" for oil & gas exploration and ACOR is positioned for possible "Company-Maker" discoveries. ACOR's working interest and overriding royalty interest 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.