Commercially Produce The Longtom Gas Field on ACOR's ORRI - 1st Gas Sales Projected at Approximately 11,000 Barrels of Oil Per Day Equivalent by 2008 CISCO, Texas--(BUSINESS WIRE)--May 09, 2007 Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to announce that the operator has declared the commerciality of the Longtom offshore gas project in Bass Strait on ACOR's ORRI. This is based on contracted reserves of approximately 318 BCF of gas and 4 million barrels of condensate. The cost to develop the Longtom Gas Field is estimated at approximately $AU 180,000,000. The operator of VIC/P54 has also executed a revised gas sales agreement with Santos Limited and is in the final stages of agreeing its project financing facilities. Other key project attributes to note include: -- The first gas from the Longtom project is forecast for the third quarter of 2008. -- Major works including pipeline installation and the drilling of an additional well are scheduled for the first half of 2008 in order to meet the first gas production target. -- The operator is currently converting letters of intent for all major project equipment items and services to final contracts. -- The Longtom field development plan is being finalized with a production license submission to the designated authority to be submitted in May. All necessary Government project approvals are expected to be secured by the middle of 2007. -- Gas from the Longtom field on ACOR's ORRI will be produced via sub-sea wells linked by a new 12" pipeline to the Santos owned and operated Patricia/Baleen gas facility. Gas Sales and Processing Agreements Contracts to process and purchase up to 318 BCF of gas and associated liquids from the Longtom field have been revised to accommodate the financing arrangements with the operator's future financiers. All key commercial terms for the revised gas sales agreement remain unchanged from the agreement signed with Santos in December 2005. Under the agreement the operator will deliver raw gas from the Longtom field to the Santos owned and operated Patricia/Baleen gas processing plant near Orbost. Santos will process and purchase the processed gas and associated liquids. Santos has agreed to process up to 409 BCF of raw gas from Longtom and purchase the first 318 BCF of the sales gas at defined prices. The agreements are subject to regulatory approvals relating to the project. Santos also has an option to acquire up to 35% interest in the Longtom project. About the Longtom Gas Field The original Longtom-1 discovery well intersected a 1312 foot gas column in the Emperor formation. This was confirmed by the Longtom-2 appraisal well drilled by Apache Energy Limited ("Apache") and the operator in late 2004, which intersected a gas column in excess of 1312 feet long in five separate reservoir zones. A gas sales agreement for Longtom gas was signed with Santos in December 2005. Santos has agreed to process up to 409 BCF of raw gas from the Longtom field through its existing onshore Patricia/Baleen facility near Orbost in north eastern Victoria. Santos has agreed to purchase the first 318 BCF of the sales quality gas production at defined prices. The Longtom-3 well drilled in September 2006 by the operator on a sole risk basis, confirming the commercial potential of the Longtom field when a sustained flow rate of over 75,000,000 cubic feet of gas per day was achieved during the second production test over the field's lower reservoir sections. These lower reservoir sections contain over 80% of the hydrocarbon volumes in the Longtom field. A test of the upper reservoir sand which did not flow in the Longtom-2 well also confirmed the capacity of this sand to flow. A second objective in the VIC/P54 permit is the Longtom Upper prospect, a lead which represents a possible extension to the Longtom field containing up to 250 BCF of additional gas which will be tested by a future exploration well. ACOR owns a 1/20th of 1% ORRI under VIC/P54 Note: Barrels of oil equivalent ("BOE") as stated above is based on the energy equivalent of oil to gas. 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 email@example.com
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