2nd Well in the Eleven (11) Well Drilling Program Strikes Oil - 3rd Well Thungo 10 Spuds on ATP 267 under ACOR's ORRI Located Approximately 5 miles from the 2nd Largest Onshore Oil Field.

CISCO, Texas -- Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to announce that the JV partner of ATP 267 has cased and suspended the Thungo 9 well as a future oil producer on ACOR's ORRI.

The Thungo 9 well is located in PL 51 of the Nockatunga Block of ATP 267 and was the second well of the eleven (11) well drilling program in the Nockatunga Block in the Cooper Basin of southwest Queensland.

Thungo 9 spudded on January 8th and was drilled to a Total Depth of 4,560 feet. Trace fluorescence with slow bleeding cut was observed in the Coorikiana Sandstone over the interval 2,001 - 2,135 feet. The Murta Member, the primary oil target, had fluorescence up to 80% and associated gas shows. The electric logs indicated approximately 26 feet of net pay in the Murta Member. Production casing was run and the well was suspended as a future Murta oil producer.

The PDI 721 rig was released on January 14th and moved to the Thungo 10 location. The 3rd well of the eleven (11) well drilling program in the Nockatunga Block in the Cooper Basin of southwest Queensland, the Thungo 10 well on ACOR's ORRI spudded on January 15th. Surface casing had been set at a depth of 613 feet and the well was drilling ahead at 1,430 feet.

A total of five wells will be drilled on the Thungo oil field targeting oil in the Murta Member and the Birkhead Formation.

About the Eleven (11) Well Drilling Program on ACOR's ORRI:

The eleven (11) well drilling program is designed to appraise the Birkhead oil pool discovered in the Muthero 3 well in December 2005 on the Muthero oil field.

The Muthero 3 appraisal well is located in the Petroleum License (PL) 51 on ACOR's ORRI. Muthero 3 was drilled to a total depth of 4692 feet. Oil shows were encountered in the Birkhead Formation and Murta Member during drilling. DST-1 flowed oil on final flow at 1030 BOPD through a 1/2" choke at 25 psi. Muthero 3 was cased and suspended as a future Birkhead oil producer. The Muthero 3 well commenced production at around 525 BOPD in February 2006.

The wells are drilled in 6 to 10 days and connection of successful wells is targeted in 40 to 60 days. The successful wells will be completed and connected to existing oil production facilities which will be upgraded to handle the anticipated increased production volumes on ACOR's ORRI.

About ATP 267:

ATP 267, including Petroleum License (PL) 33, 50 & 51 consists of approximately 220,800 gross acres and is located in Queensland Australia in the prolific Cooper/Eromanga Basin. The western border of ATP 267 is located approximately 5 miles from the Jackson Oil Field. The Jackson Oil Field is Australia's 2nd largest onshore oil field and has reserves in excess of 40,000,000 barrels of good quality crude oil or approximately $2.2 Billion Dollars at current crude market prices.

Three wells were drilled on ATP 267 during the 2005 drilling program; Muthero 3, Winna 4 and Currambar 1. All three wells were successful on ACOR's ORRI.

ACOR management is excited about the discoveries made in 2005 on ATP 267 and is very excited about the successful beginning of this eleven (11) well drilling program and the potential revenue that could be generated for the company.

ACOR owns 17.15% of 1% ORRI under ATP 267 which include Petroleum License 33, 50, & 51.

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.