Longtom 3 Offshore Well Delivers Strong Results - Lower Sands Flows 77 Million Cubic Feet of Gas + 324 BBLS of Condensate per day - Upper Sand Flows 30 Million Cubic Feet of Gas per Day on ACOR's ORRI.

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 final appraisal objective of the Longtom-3 well has been achieved with outstanding gas flows recorded during the second production test. This is a key milestone in the commercialization of the Longtom field.

The test of the lower sands of the Admiral Formation ("100, 200 & 300 sands") flowed at an estimated rate of 77 Million cubic feet of gas per day through a 1 1/4" choke directly to the flare. The maximum flow rate using the test separator was 59 Million cubic feet of gas per day through a 60/64""inch choke with a flowing well head pressure of 2946 psi. Flow rates through the separator were limited by the capacity of the testing equipment.

The well was opened up at 5 PM on Friday September 15th and flowed for 24 hours before being shut in to monitor the pressure response from the reservoir.

An average condensate rate of 324 barrels per day was recorded during a flow period with a gas rate of 36 Million cubic feet of gas per day. The condensate ratios recorded from this test are approximately twice that recorded in the Longtom-2 test over the 200 sands, and 5 times those recorded in the Longtom-3, test #1 over the 400 sands.

This indicates that the laterally extensive 100 sand is more condensate rich than predicted. The additional condensate will be an economic benefit to the Longtom project as one (1) barrel of condensate will sell for an equal amount or sometimes for more money than one (1) barrel of crude oil. Sampling during the test recorded expected levels of carbon dioxide (less than 1%) and less than 1 part per million hydrogen sulphide.

The results from this test demonstrate the excellent flow capacity of the lower Longtom reservoirs with a horizontal well completion. The flow capacity of Longtom-3 alone is expected to be sufficient to supply the anticipated maximum contract rate requirements for the Longtom Field.

Flow test #2 was conducted in the horizontal section of the well over the following intervals:

--The 100 sand - 3266m - 3922m

--The 200 sand - 2408m - 2933m

--The 300 sand - 2325m - 2340m

The 100, 200 and 300 sands are expected to hold approximately 80 % of field gas volumes and will provide the main source of commercial production.

As stated in the previous ACOR press release, flow test #1 test on the Longtom 3 well over the upper sands (400 reservoir sands) achieved an initial flow rate of approximately 30 Million cubic feet of gas per day before being choked back to achieve a stabilized rate. The shallower 400 sands tested earlier (Longtom-3, test 1) are at lower pressure and are expected to be drained later in field life.

The Longtom-3 H (Horizontal) well reached a total measured depth of approximately 15,335 feet. Drilling intersected a total of 3,379 feet of gross gas reservoir on ACOR's ORRI.

About VIC/P54:

The Longtom Gas Field is located in the Gippsland Basin on ACOR's ORRI under VIC/P54 and was discovered by BHP in 1995, but was considered sub-commercial (70-120bcf) at the time due to the lack of maturity of the gas markets and the interpreted reservoir quality. A 386+ meter gas column was intersected in the Emperor Formation in the Longtom 1 well.

The Longtom 2 well was drilled in late 2004. A 400+ meter gas column was confirmed within the structure. The lower reservoir sand section in Longtom 2 flowed at a stabilized rate of 18-19 Million cubic feet of gas per day over a 12 hour period -- an excellent result confirming the commercial potential of the previously untested lower reservoir section in Longtom. The upper reservoir sand section did not flow gas to surface -- two third party engineers confirmed a subsurface test valve did not open; hence the well could not flow against the closed valve. A core from the upper reservoir section was taken and analyzed, confirming an excellent reservoir section highly capable of flowing gas. No gas-water contact has been intersected at Longtom to-date, suggesting deeper reservoir potential exists.

Since then, the operator of VIC/P54 has increased their best estimate of the Longtom Gas Field on ACOR's ORRI by 38% to 438 Bcf of possible gas reserves.

Full Field Development of Longtom Gas Field

The Longtom 3 well is expected to be the first of three production wells required for the field. One more Longtom well is planned prior to first commercial production. The testing of the Longtom-3 well through a production completion and Xmas tree means the well is now ready for commercial production without any further rig intervention being required.

The operator of VIC/P54 said, "This is an exceptional result confirming our long held belief in the viability of the Longtom project. The successful deployment of a horizontal completion in the Longtom reservoirs is an innovative solution that has yielded commercial flow rates necessary to confidently proceed with field development."

The Company recently reported that the results obtained from the drilling of the Longtom-3 well confirmed the existence of commercial gas volumes. The Company expects to be in a position to report revised volumes for the field which will be classified as reserves within the next three months.

Front engineering and design for the Longtom field development has recently been completed and the Company plans to submit a preliminary Field Development Plan to government prior to the end of 2006.

The Longtom 3 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-3 well was a complex well and 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.

ACOR owns interest in four (4) offshore concessions located in the Bass Strait in the Gippsland Basin, the largest interest being 25% working interest under VIC/P60.

VIC/P60 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 under VIC/P60.

About The Gippsland Basin:

In excess of 4 billion barrels of oil/condensate and 12 TCF gas reserves have been discovered in the Basin since exploration drilling began in 1964, with remaining reserves estimated at 600 million barrels of oil and 5 trillion cubic feet of gas. Current production of the basin is around 140,000 barrels per day of crude and 570 million cubic feet per day of gas. At peak rates, the Gippsland Basin can deliver more than 1,000 million cubic feet a day.

Some of the very best oil production in the world is found in the Gippsland Basin. Take for example, the Halibut Oil Field. The average well in the Halibut Oil Field has produced 60,000,000 bbls of oil per well or $4,200,000,000 worth of oil per well, at today's prices of $70.00 per barrel.

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.