Seven (7) out of Eight (8) Wells adjoining ACOR's PEL 112 Strike Oil - 88% Success Ratio - New Field Discovery Callawonga-1 IP 2400 BOPD- Well Still Drilling - Going Deeper. Update on $35,000,000 Offshore Well Drilling on ACOR'S ORRI.

CISCO, Texas -- Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to report that the operator of the adjoining block to the north of ACOR's PEL 112 announces a new field oil discovery at Callawonga-1. An open-hole production test over the uppermost Namur Sandstone interval 1,340 - 1,346 meters flowed oil to surface in 15 minutes. The final rate was 2,400 barrels of oil per day, flowing at a stabilized wellhead pressure of 115psi through a 1/2 inch surface choke. No water was observed during the test and a full string of oil was recovered. The operator will now drill ahead in the Callawonga-1 to further evaluate the Namur Sandstone and deeper objectives.

As stated in previous ACOR press releases, ACOR has raised $4,500,000 to drill three (3) wells on PELs 112 & 108 in South Australia. PEL 112 & 108 covers approximately 1,325,715 gross acres, and has never been drilled (no dry holes). ACOR and partners have just completed a new seismic survey on PELs 112 and 108 at a cost of approximately $1,100,000. The new seismic survey has discovered two large seismograph highs as well as 24 smaller ones. The 2 large seismograph highs are called C-23 & C-26, which cover a combined area of approx. 5,534 acres with excellent closure.

ACOR and partners have invested approximately 5 years and several million dollars in PELs 112, 108, & 109. ACOR management is very excited to have negotiated a 3-well carried position over the 3 areas, which substantially reduces the Company's risk. The Carried Working Interest has potential to bring substantial revenue into the Company, should any or all of the three wells drilled prove to be commercial. ACOR's carried working interest in the 1st three wells will exclude ACOR from all exploration and completion costs.

All the wells mentioned below adjoin ACOR's working interest 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

Sellicks-2 well came in with an initial potential of 2700 BOPD

Sellicks-3 well came in with an initial potential of 1365 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.

The nearest oil field to ACOR's PEL 112 on the northeast is the Tantana Oil Field, which has averaged 937,500 bbls of oil per well or $68,000,000 per well at current oil prices and is located approx. 13 miles NE of ACOR's PEL 112. The Seismic line 84-XAB shows a possible look-alike structure on ACOR's PEL 112 similar to the Tanatana Oil Field.

South Australia's Cooper/Eromanga Basin is exploding with new drilling activity, rewarding investors with some of the most profitable production in the area. ACOR's PEL 112 Is In The Middle Of It!

Why are we talking about the Wells that adjoin ACOR's PEL 112?

Take the smallest of the recent discoveries (276 BOPD) and multiply (x) it by $70.00 per barrel, current market price of crude oil, times (x) 30 days, times (x) 12 months and apply it to times (x) ACOR's PEL 112 working interest and see the results for yourself. Now do the same with the largest discovery that adjoins ACOR's PEL 112.

Smallest Discovery so far, Worrior-3 IP 276 BOPD

Largest Discovery so far, Warrior-1 IP2,800 BOPD

Now you can see why ACOR management is so excited about raising the $4,500,000 to drill on PEL 112. In our opinion, any one of the recent discoveries could be a possible "Company-Maker" if discovered on PEL 112.

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.

Offshore VIC/P54 - Longtom-3 Update

ACOR is pleased to advise that on Wednesday, July 26th, the Longtom -3 well had reached a depth of 3396 meters measured depth and was drilling ahead in the 9 1/2" pilot hole. Progress has been slower than was anticipated. The well is located in VIC/P54, which consists of 155,676 gross acres located in the offshore Gippsland Basin.

The target section has been intersected slightly deeper than expected and the pilot hole is anticipated to reach total depth (TD) of approximately 3500 meters later today. Due to operational constraints the Logging While Drilling (LWD) tools have not been run, so wireline logs will be run after the well reaches TD, before the pilot hole is plugged back and the main horizontal well bore drilled through the Longtom gas sands. Several sands have been encountered over the target interval and there are indications of gas. While this is encouraging, wire line logs will be required to evaluate rock properties and gas saturations.

The well is being drilled utilizing the Ocean Patriot drilling rig. 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. 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. The lower reservoir section in Longtom-2 flowed at a stabilized rate of 18-19 mmcf/day over a 12 hour period -- an excellent result confirming the commercial potential of the previously untested lower reservoir section in Longtom. Longtom-3 is approximately 1.2 kilometers south-west from the Longtom-2 location.

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 Gas Sales Agreement with Santos is conditional on the successful completion of the Longtom-3 appraisal well and the operator of VIC/P54 is confident that this will be achieved.

Upon a successful completion of Longtom-3, the first gas is anticipated to flow from the Longtom Gas Field by mid 2008.

The Longtom-3 well will be complex and will 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.

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.