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VIC/P54 Operator Estimates that Longtom Gas Contract &


Condensate Are Equivalent to Approximately 57 Million Barrels of Oil or $2,800,000,000 on ACOR's ORRI

Longtom 4 Well to Drill in 2007

CISCO, Texas--(BUSINESS WIRE)--January 25, 2007 Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to announce that the operator of VIC/P54 states in their annual report that their best estimate of the 350 petajoules (PJ) gas contract along with the 4 million barrel condensate from the drilling of the Longtom 3 well on ACOR's ORRI is equivalent to approximately 57 million barrels of oil or approximately $2.8 Billion Dollars, using current market prices.

In 2006, the operator of VIC/P54 signed a $1 billion gas contract with Santos Ltd, which provided the commercial platform to appraise Longtom. The contract calls for the delivery of 350 PJ of sales gas from the Longtom field at an agreed price. If Longtom produces in excess of 350 PJ of gas, a joint marketing agreement exists for sales of a further 100 PJ of gas from Longtom at market prices.

The result of Longtom 3 well drilled in 2006 has given the operator more confidence that they not only have significant gas resource, but they have more than adequate production on a per well basis to justify a commercial development.

First gas from Longtom Gas Field on ACOR's ORRI is currently expected to flow in mid-2008. VIC/P54 consists of 155,676 gross acre and is located offshore Australia in the prolific Gippsland Basin.

The conversion rates used for the best estimates figures stated above for the Longtom gas field are 1 barrel of condensate is equal to 1 barrel of crude oil equivalent and 6.6 PJ is equal to 1 million barrels of oil equivalent. These figures are taken from the operator's annual report. In 2005, the internationally recognized consultants Gaffney Cline and Associates (GCA) increased their Best Estimate of Longtom Contingent Gas Resources by 38% to 438 Bscf.

About the Longtom Gas Field

The permit VIC/P54 contains the Longtom gas field which was discovered by BHP Billiton in 1995 but was considered non-economic. The Longtom 1 discovery well intersected a 1,266 foot gas column in the Emperor formation, which was confirmed in the Longtom 2 appraisal well drilled by Nexus in late 2004 Longtom 2 intersected a 1,312 foot plus gas column.

On test the lower reservoir section flowed at a stabilized rate of 18-19 MMscf/d over a 12 hour period. However the upper reservoir section did not flow gas to surface after the failure of a sub-surface valve in the well bore although a core cut from the well confirmed an excellent upper reservoir section highly capable of flowing gas.

The Longtom 3 well, drilled in July 2006, confirmed the commercial potential of the Longtom field when an estimated flow rate of over 75 MMscf/d was recorded during the second production test over reservoir sections including the upper sand which did not flow in the Longtom 2 well. The Longtom 3 well intersected a total of 3,379 feet of gross gas reservoir on ACOR's ORRI.

Longtom 3 was tested through a production completion and Xmas tree leaving the well ready for production without requiring any further rig intervention. The Longtom 3 appraisal well was part of a sole risk appraisal program operated by Nexus.

From deepest to shallowest, the gas bearing reservoir units in the Longtom field are named the 100, 200, 300, 400 and 500 sands. The reservoirs appear to be connected to a series of vertically separate, but laterally connected, common aquifers.

Two production tests were conducted on the Longtom 3 well were highly successful. The first test produced gas from the 400 sand at 23 MMscf/d. These results confirmed the flow potential of the (upper) 400 sand reservoir in the Longtom field, addressing the concern from the Longtom 2 well where a gas flow was not achieved due to the valve failure.

The second test, over the 100, 200 and 300 sand intervals exceeded expectations producing an estimated 77 MMscf/d when bypassing the test separator and 59 MMscf/d when flowing through the test separator.

Longtom Gas Field Could Be Bigger

The Longtom 3 appraisal well in VIC/P54 has confirmed the potential for gas charged sands in the Admiral Formation along the northern margin of the Gippsland Basin to flow gas at commercial rates and has opened up a new exploration play in this area.

The drilling of the well has also confirmed the viability of a new technique for defining exploration targets in this area. The horizontal section of the Longtom-3 appraisal well was drilled along a sinusoidal path, specifically designed to target seismic amplitude anomalies, which were interpreted to correspond to thin gas charged sands within the Longtom Field.

The technique proved to be very successful in predicting the presence of gas sands within the field and further analysis of the 3D seismic data has highlighted the potential for several other exploration targets close to the Longtom Field, which are characterized by similar seismic anomalies.

The most significant of these is a shallower exploration target that directly overlies the Longtom field and has a very similar, well defined seismic anomaly on the 3D seismic data.

The 'Longtom Upper' sand is expected to extend over an area of approximately 8 miles and be as thick as 131 feet in certain areas. The possible resource potential of the Longtom Upper sand is approximately 250 BCF of gas and will be tested by a future well. If successful, these sands could be readily integrated into a Longtom development at modest additional cost.

ACOR owns 5% of 1% ORRI under VIC/P54.

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 $3,000,000,000 worth of oil per well, at current crude market prices.

More Good News on ACOR Gippsland Basin Assets:

About VIC/P45:

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

Apache begins shooting additional 3D Seismic on VIC/P45 in March and Drilling the 1st well later this year.

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. In addition, Apache has undertaken to assume its share of Royalty obligations to third parties. Apache will begin to select the drilling location for their 1st well.

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 7.5% of 1% ORRI under VIC/P45.

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.

CONTACT: Australian-Canadian Oil Royalties Ltd. Investor Relations, 254-442-2638 acor@classicnet.net

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