July 4th Fireworks Explode with Spudding of Offshore Australia Longtom-3 with Est. Reserves of 438 BCF on ACOR's ORRI Under VIC/P54.

CISCO, Texas -- Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to announce the expected commencement of drilling operations on the Longtom-3 appraisal well using the Ocean Patriot offshore drilling rig. The Longtom-3 well is expected to spud in the 1st week of July and is part of a sole risk appraisal program operated by Nexus. VIC/P54 is located in the prolific Gippsland Basin of the Bass Strait and consists of 155,676 gross acres. The operator has a 100% interest in the Longtom Gas Project, which also includes front end engineering design studies based on the analysis of newly available seismic data by internationally recognized consultants, Gaffney, Cline & Associates. The operator has increased their best estimate of the Longtom Gas Field on ACOR's ORRI by 38% to 438 BCF of possible gas reserves.

The Longtom-3 well is designed to evaluate the extent and productivity of gas bearing reservoirs encountered in the Emperor formation by the Longtom-1 and Longtom-2 wells. The Longtom-2 well intersected 96 meters of net gas sands over a gross interval of 260 meters. Longtom-3 will be drilled approximately 1.2 kilometers south-west from the Longtom-2 location.

The first phase of drilling will involve a near vertical well (the pilot hole) designed to confirm the presence, extent and quality of gas bearing reservoirs. Upon the confirmation of a minimum gas column, the pilot hole will be plugged back and deviated. A horizontal well section will be drilled to intersect gas reservoirs encountered in the pilot hole. It is intended that the horizontal well will be completed and tested to confirm the productive potential of the reservoirs.

The vast bulk of the equipment required for the Longtom-3 well has now arrived in Melbourne. The largest single piece of equipment, the 33 ton sub-sea well head, is making final preparations in Melbourne.

The $210 Billion Dollar Neighborhood

When purchasing Real Estate, you are always told, "Location, Location, & Location," this great location is called the Gippsland Basin. ACOR management feels ACOR's ORRI & Working Interest assets VIC/P54, VIC/P53, VIC/P45 & VIC/P60 are located in a great neighborhood. For example, some of the very best oil production in the world is found in the Halibut Oil Field. The average well in the Halibut Oil Field has produced 60,000,000 bbls of oil or $4,200,000,000 worth of oil per well, at today's prices of $70.00 per barrel.

The nine giant oil & gas fields near ACOR's ORRI have some very impressive production figures as shown below. The fields are still producing.

1.Kingfish Field has produced 1,100,000,000 barrels of oil or $77,000,000,000 at current market prices of $70.00 per barrel.

2.Bream Field has produced 88,000,000 barrels of oil or $6,160,000,000 at current market prices of $70.00 per barrel.

3.Barracouta Field has produced 1.1 TCF of gas or $2,750,000,000 at $2.50 per mcf gas prices.

4.Snapper Field has produced 630 BCF of gas or $1,575,000,000 at $2.50 per mcf gas prices. The nearest well in the Snapper Field is approx. 1 mile from ACOR's VIC/P53 lease line. ACOR's Seismic work shows a seismic high coming from the Snapper Field possibly extending over into Permit 53. The Snapper Field has produced an avg. of approximately 105 BCF of gas per well.

5.Marlin Field has produced 2.4 TCF of gas or $6,000,000,000 at $2.50 per mcf gas prices.

6.Fortesque Field has produced 260,000,000 barrels of oil or $18,200,000,000 at current market prices of $70.00 per barrel.

7.Halibut Field has produced 820,000,000 barrels of oil or $57,400,000,000 at current market prices of $70.00 per barrel.

8.Cobia Field has produced 135,000,000 barrels of oil or $9,450,000,000 at current market prices of $70.00 per barrel.

9.Mackerel Field has produced 450,000,000 barrels of oil or $31,500,000,000 at current market prices of $70.00 per barrel.

More ACOR Assets in the $210 Billion Dollar Neighborhood

About VIC/P53

VIC/P53 consists of 182,858 gross acres. The WI partner of VIC/P53 has completed the shooting of 524 square kilometers of high resolution 3D seismic data on VIC/P53 at an estimated cost of $US5,000,000. One of the prime purposes of the 3D seismic survey in VIC/P53 was to investigate the area to the east of the Veilfin-1 well, which produced oil and gas shows, referred to as the Bazzard Lead.

The WI partner is now processing the seismic data and will employ leading interpretation and depth conversion experts to interpret the data and to carry out detailed depth conversion calculations. By 2006, the operator plans to have completed its studies and to then be ready to drill a well in the Permit, subject to rig availability.

VIC/P53 is considered prospective for oil and gas at the top Latrobe and also at deeper intra Latrobe levels. VIC/P53 is surrounded by the oil and gas producing fields held by EXXON/BHP. The location, adjacent to this infrastructure, and proximity to pipelines, processing facilities and major markets, offers potential advantage through infrastructure savings and gives encouragement to participation in VIC/P53. The hydrocarbons recorded at Veilfin-1 established the existence of a working petroleum system in the permit area.

ACOR owns 3/20ths of 1% ORRI under VIC/P53.

About VIC/P45:

$22 Billion Oil Company Apache Becomes Operator of ACOR's ORRI under VIC/P45

VIC/P45 consists of 214,896 gross acres. VIC/P45 is located offshore in the most prolific oil-producing basin in Australia, approximately 1 1/2 miles east of the Kingfish Oil Field in the Southern Gippsland Basin in the Bass Strait.

The Kingfish Oil Field, the largest oil field in Australia, has produced 1,100,000,000 barrels of oil since its discovery. There are currently 23 producing wells in the field. The permeability in the pay section ranges between 5,000 and 40,000 millidarcies, which is extremely high. On mapping, there are 14 structures on VIC/P45, which includes one oil and gas field discovery with 16 pays and over 1,000 feet of pay section and a second with one gas pay section. This was a discovery well drilled off projected prospects.

Apache has agreed to pay 100% of the cost to drill the 1st well; in return Apache will earn a 66.6667% working interest. Depending on the results from the 1st well, Apache may elect to drill a second well and pay 100% of the cost to drill the second well. Any discovery location, as defined in the Petroleum (submerged Land) Act shall, at Apache's discretion, be exercised from any such reconveyance (should there be any).

In addition, Apache has undertaken to assume its share of Royalty obligations to third parties. Upon approval of this transaction by regulatory authorities, Apache will become operator of VIC/P45, and begin to select the drilling location for their 1st well. The well is planned to be drilled after a suitable drilling rig can be contracted.

IMI, an independent third party geological appraisal company estimated that VIC/P45 could possibly contain approximately 350 million barrels of oil and 4 TCF of gas.

ACOR owns a .075% of 1% ORRI under VIC/P45.

About VIC/P60:

$4.6 Billion-Possible Est. Reserve Estimate for 1 of 6 Leads on ACOR's VIC/P60

Permit 60 is located just southeast of Permit 45 and covers approximately 339,769 acres, it is also ACOR's largest working interest asset offshore. ACOR management has identified six leads from the existing seismic data. The A-1 lead is approximately 4.97 miles long and 1.24 miles wide with a seismic bright spot anomalie rated good to excellent. The seismic bright spot is 108' thick and 820' horizontal by 20,500' perpendicular wide behind a fault on the flank of the anticline. ACOR has traced the beds to the nearest oil and gas fields after processing 5,000 +/- seismic lines.

The A-1 Lead, if productive has the possible potential to contain approximately 77,771,244 barrels of oil or $US4,666,274,644, at current market prices.

ACOR owns a 25% Working Interest.

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.

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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.