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$A160,000,000 Offshore Longtom Gas Field Development Gets Green Light to Move Forward on ACOR's ORRI -1st Gas Sales Estimated at 11,000 BOE Per Day

Posted on: Tuesday, 16 October 2007, 12:00 CDT

Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to announce that the operator of VIC/P54 has been granted a Production License from the Australian Government for Petroleum Permit VIC/L29 in relation to the Longtom gas field on ACOR's ORRI.

The operator has raised $A160,000,000 to fund the development of the Longtom gas field. With the official Production License granted, the operator can now begin development of the Longtom Gas Field on ACOR's ORRI. The first gas from the Longtom Gas Field is forecast for the third quarter of 2008, estimated at approximately 11,000 (BOE) barrels of oil equivalent per day from a 3,400 foot pay section.

Preparation for the pipeline installation is continuing according to plan. All pipeline and subsea components are now being manufactured. The installation vessel is expected to be in the field in March 2007 with all activities scheduled to finish before the end of May 2008.

Longtom--4 Development Well

The Longtom-4 development well is scheduled to spud in May 2008 and be ready for first gas during the quarter commencing July 2008. However, it should be noted that Longtom-4 well is not required for first gas as the Longtom-3 well can provide the entire Santos contracted flow rate equivalent to approximately 11,000 BOPD.

This does not include the approximately 4 million barrels of condensate or approximately $340,000,000 at current crude prices which is forecast to be produced in conjunction with the 350 BCF of contracted gas.

Longtom-5 Well Seeks To Possibly Increase Gas Field Reserves

The operator has secured a rig slot to drill a further appraisal well (Longtom-5) on the Longtom field. Appraisal of the Longtom field would be aimed at testing the field's upside potential. The field has possible contingent resources in excess of 800 BCF based on third party resource estimates by independent engineering group, Gaffney Cline and Associates.

Alternatively, the rig slot may be used to test the Longtom Upper prospect which has the potential to hold 200 BCF of gas. The Longtom Upper prospect has been identified using seismic amplitude techniques which have proved accurate in locating gas during the appraisal of the Longtom field. The well will be drilled after the Longtom-4 development well is completed in mid 2008.

ACOR is less than a year away from expected first gas sales from Longtom and a significant cash flow.

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.

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 the Longtom-5 well.

VIC/P54 is located is located in the Gippsland Basin in the Bass Strait and is one of four properties covering 927,199 gross acres under which ACOR holds ORRI's.

Note: Barrels of oil equivalent ("BOE") as stated above is based on the energy equivalent of oil to gas.

ACOR owns a 1/20th 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.

ACOR's offshore assets in the Bass Strait are all adjacent to giant producing fields and proximal to existing infrastructure and an expanding gas market.

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.

Source: Business Wire

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