ACOR's Trip to Australia in May Was Successful -Completes Joint Venture with Two (2) Oil Companies Raises Approx. $6,500,000 on Approx. 8,414,348 Gross Acres.

CISCO, Texas -- Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB: AUCAF) is pleased to announce that while ACOR management was in Australia attending the APPEA Convention May 7that the new Convention & Exhibition Center in Gold Coast, Queensland. ACOR met with several investors indicating interest in exploring for oil & gas on ACOR's assets. The final result of those meetings has lead to the agreement of two separate transactions with two separate oil companies agreeing to explore for oil & gas on approximately 8,414,348 gross acres and spend approximately $6,500,000 in onshore exploration on ACOR's vast assets located in South Australia and Queensland, in the prolific Cooper/Eromanga Basin.

ATP 582 Agreement:

A verbal agreement was made with the investors interested in exploring ATP 582 while in Australia last May; this was put into contract form and signed today. The new Joint Venture partner will operate the concession. The group plans to shoot new a seismic grid survey over the leads identified by ACOR management from old seismic data to confirm good drillable targets with plans to drill a well. ATP-582 is located in Queensland Australia in the prolific Cooper/Eromanga Basin. The permit area covers approximately 6,716,000 gross acres.

The Southern zone of ATP 582 is currently the best area of all the areas of the concession for oil & gas exploration. Besides being up dip of the approximately $1 Billion dollar annual production from the Santos-Exxon producing block, it is along strike with many new discovery wells that have sustained daily production of 1,000 - 3,000 barrels of oil per day. ACOR management has currently identified two prospects on ATP-582 from the 850 miles old seismic data, owned by ACOR.

The Samphire prospect covers approximately 3,800 acres and exhibits approximately 110 feet of closure. It is possible that a good potential exists for a 10-15 million barrel field, with a possible potential of approximately 40 million barrels.

The Samphire West, which covers around 4,700 acres. If the Samphire prospect proves to be productive, a number of additional field discoveries may result from leads in the Southern part of ATP-582. Both prospects are a series of sandstone (clastic) reservoirs of pinch-outs and structural traps that have formed on the flank of the local high.

ACOR will be carried for 50% WI in the 1st well drilled under ATP-582.

PEL 108, 109 & 112 Agreement:

The other ACOR deal agreed to while in Australia is on PELs 108,109, & 112, located in South Australia. The Joint Venture Partner has contracted to drill three (3) wells on the areas and carry ACOR for 13.832%(a) in the first three (3) wells. by agreeing to and completing the drilling of the three (3) wells, The JV partner will earn a 66.667% Working Interest under all three areas located in South Australia. After the third well, ACOR will be responsible for its part of any future exploration performed on the three areas.

PEL 112 covers 818,904 acres and has never been drilled (no dry holes on the concession) and is located in the Cooper/Eromanga Basin of South Australia. ACOR recently completed a new seismic survey on PEL 112 at a cost of approximately $1,100,000. The new seismic survey discovered two large seismograph highs as well as 24 smaller ones. The two large seismograph highs are called C-23 & C-26, which cover a combined area of approx. 5,534 acres with excellent closure.

ACOR et al has invested approximately five years of time and several million dollars on PEL's 112, 108, & 109. ACOR's management is very excited to have negotiated a carried position for the company in three (3) wells, reducing the risk substantially and also allowing the potential for possible substantial revenue to come into the company, should any or all three (3) wells drilled prove to be commercial producing wells. ACOR's carried working interest in the first three (3) wells will exclude ACOR from all exploration and completion cost.

As stated in previous ACOR press releases, twelve (12) new wells adjoining PEL 112 to the North, East & West have been slated for drilling in 2006. Five (5) wells out of six (6) of the 12 wells have struck oil. This is a phenomenal 83% success ratio. The latest successful well to be drilled that adjoins ACOR's PEL 112 was the Sellicks-2, with an initial potential of approximately 2700 BOPD, a new oil pool discovery and is to be completed as a multiple zone oil producer.

All the wells mentioned below adjoin ACOR's WI PEL 112 to the north
and to the east.

Silver Sands-1 well came in with an initial potential of 1062 BOPD
Christies-1 well came in with an initial potential of 500 BOPD
Christies-2 well came in with an initial potential of 1960 BOPD
Christies-3 well came in with an initial potential of 2400 BOPD
Christies-4 well came in with an initial potential of 653 BOPD
Christies-5 well came in with an initial potential of 403 BOPD
Sellicks-1 well came in with an initial potential of 1780 BOPD
Worrior-1 well came in with an initial potential of 2800 BOPD
Worrior-2 well came in with an initial potential of 2000 BOPD
Worrior-3 well came in with an initial potential of 276 BOPD
Worrior-4 well came in with an initial potential of 1660 BOPD

The current production on the adjoining area to the north of ACOR's PEL 112 is averaging a reported $33,000,000 a year.

The current production on the adjoining area to the east of ACOR's PEL 112 is averaging a reported $75,000,000 a year.

ACOR owns 16.6665% Carried WI through the first 3 wells under PELs 108, 109, & 112. This includes the 2.834% carried working interest held by the 3 stockholders who paid ACOR's half of the costs for new seismic.

Summary:

The Cooper/Eromanga Basin in South Australia & Queensland is exploding with new drilling activity, rewarding investors with some of the most profitable production in the area and ACOR is seeking to reward its shareholders as well. 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.

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."

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.