Update on $35,000,000 Offshore Well Longtom 3 on ACOR's ORRI Under VIC/P54 - Longtom 3 Horizontal Well Drilling Ahead with 1280 Feet of Gas Reservoir Intersected to Date.

CISCO, Texas -- Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to report that the operator of VIC/P54 states that on Tuesday the 15th of August, the Longtom-3 H (Horizontal) well was drilling ahead at a measured depth of approximately 9547 feet.

Key Points

Longtom 3 H (Horizontal) has, to date, intersected approximately 1280 feet of gas reservoir sands within 2 separate reservoir objectives in the lower part of the Admiral Formation.

The well is tracking through laterally continuous gas sands that were predicted from the operator's interpretation of the seismic amplitude data.

Operations Conducted Since Last Report:

Following the successful drilling of the Longtom-3 ST1 side track section, the well was plugged back to a depth of 7825 feet and 10 3/4 inch casing was run and set across the upper gas sands.

To date, 1772 feet of new hole has been drilled in the horizontal section of Longtom-3 H.

Future Operations:

Planned future well operations are to continue to drill the horizontal well through the lower gas sands of the Admiral formation. The horizontal section of the well will continue to provide information in relation to the quality and lateral continuity of the lower Admiral reservoirs. After the drilling of the horizontal section it is intended that the well will be completed with both the upper and lower sands being tested to confirm the productivity of the key gas zones.

Upon completion of a successful production test the well will be suspended as a future producer. The Operator of VIC/P54 said, "The results of the well to date continue to be very encouraging and provide us with increased confidence in our geological interpretation. The intersection of such a large reservoir section in this early part of the horizontal well path is a particularly positive result in terms of potential well productivity. We look forward to a similarly strong correlation between potential pay zones identified on seismic and the actual gas sands which we expect to intersect from the rest of the well."

The Longtom-3 horizontal well will provide further important appraisal data in relation to the lateral distribution and quality of gas reservoirs in the Longtom field. The 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 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 is a complex well 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.