$50 Million Dollar- 51 Well Drilling Program on ACOR’s ORRI Under ATP-299- Three (3) New Wells Strike Oil on Three Oil Fields on the $5 Billion Dollar Potential Oil Field

Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) reports that the JV partner of ATP-299 has announced two successful new oil wells in the Gimboola and Endeavour Oil Fields as the $50 Million Dollar- 51 well program moves forward with 2 drilling rigs in operation. The Gimboola-3 was drilled at the Gimboola Field on ACOR’s ORRI about 2 kilometers northeast of the Mulberry Field. It encountered 3 meters of net oil pay in the mid Birkhead reservoir and has been cased as a future oil production well.

Drilling at the Endeavour Field on ACOR’s ORRI about 15 kilometers north of Mulberry began with Endeavour-5 spudded on May 4th. Endeavour-5 has encountered approximately 14 meters of oil pay in the Birkhead Formation. Endeavour-5 has been cased and suspended as a future oil production well.

Mulberry-16 has also been cased as a future oil production well. The well encountered good oil shows over the Birkhead reservoir and wireline logs were completed. Logging indicated approximately 6 meters of net oil pay in the middle Birkhead reservoir unit. The drilling rig PDI -735 has moved back to Mulberry Field to continue the Mulberry appraisal program and spudded Mulberry-12 on May 13th. The 2nd rig is being prepared for release to the Endeavour-11 location. Mulberry-6 and Mulberry-8 have commenced oil production.

ACOR Management is very encouraged by the new drilling results.

About The Mulberry Oil Field:

Mulberry-1 was drilled in 2004 and is producing oil at a rate of approximately 600 barrels of oil per day. The 51 wells are designed to achieve additional oil production and to test the extent of the oil pool in the Birkhead 11-77 sand discovered in the Mulberry-1 well.

The Mulberry-Gimboola-Endeavour Field is part of the Tintaburra Oil Field on ACOR’s ORRI under ATP-299. The Mulberry- Gimboola-Endeavour /Tintaburra Oil Field is estimated to contain around 84 million barrels of proved plus probable oil in place or approximately $5,036,640,000, at current market prices.

ACOR owns .0575 of 1% ORRI under ATP-299.

12 Wells to Be Drilled – All Adjoin ACOR’s 41.5% WI PEL 112 – 1st Four (4) Wells of 12 Wells Strike Oil- Avg 100% Success – 5th Well Spuds – Sellicks-2

The operator advises that Sellicks-2, an appraisal well in Sellicks Oilfield in the Eromanga Basin, South Australia, spudded on May 11th. The Sellicks-2 adjoins ACOR’s PEL 112 to the north. The Sellicks-2 is the first of two wells in a program to appraise the Sellicks Field. Since its discovery in July 2003 the Sellicks-1 has produced more than 250,000 barrels of oil or $17,500,000, using $70.00 per barrel oil and continue to produce strongly.

However, new 3-D seismic mapping suggests that the discovery well may not be optimally located on the field, and the two appraisal wells are designed to test the potential for undrained oil updip and offset from Sellicks-1. Both wells will be deviated from a single well site located adjacent to the established field facility.

The bottom-hole target for Sellicks-2 is located approximately 120 meters to the south of Sellicks-1. It has a planned total depth of 2147 meters, which is expected to be reached in 11 days.

The operator advises that an open-hole production test was performed in the Silver Sands-1 well over the interval 1354 – 1358.3 meters in the secondary objective Namur Formation. During the DST #1, the well flowed at an estimated rate of approximately 860 barrels of oil per day. The stabilized flowing pressure was 125 psi through a 1/4 inch surface choke.

DST#2 over the basal Birkhead / top Hutton interval from 1,622 – 1,636 meters implied a flow rate of approximately 202 barrels of oil per day. The well is to be cased and suspended as a future Namur and Birkhead/Hutton producer. The Silver Sands-1 is the 4th well of the 12 wells to be drilled in 2006, the Silver Sands-1 well adjoins ACOR’s PEL 112 to the north.

All the wells mentioned in this press release adjoin ACOR’s 41.5% working interest PEL 112 to the north and to the east.

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

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.

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 41.5% 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 IP276 BOPD

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

Now you can see why ACOR management is so excited about all the drilling activity that is going on adjoining ACOR’s PEL 112 to the north and east. In our opinion, any one of the recent discoveries from the smallest to the largest could be a possible “Company-Maker” discovery for our company, if discovered on PEL 112.

This is some of the most profitable production in onshore Australia, and ACOR is in the middle of it.

ABOUT PEL 112

ACOR has invested approximately 5 years of time and several million dollars on PEL’s 112, 108, & 109.

PEL 112 covers 818,904 acres and has never been drilled on (no dry holes) and is located in the Cooper/Eromanga Basin of South Australia. ACOR has just completed a new seismic survey on PEL 112 at a cost of approximately $1,100,000. The new seismic survey has discovered two large seismograph highs as well as 28 smaller ones. The two large seismograph highs are called C-23 & C-26, which cover a combined area of approx. 5,534 acres with excellent closure.

ACOR is currently getting drilling bids for the 2 best drilling locations identified by seismic. The drilling locations for C-23 & C-26 have now been staked and the photos of the locations are available on our website.

ACOR owns 41.5% WI under PEL’s 108, 109, & 112.

ACOR Management Visit to Australia

ACOR management is back from Australia, after attending the 2006 APPEA Convention May 7-10th. ACOR management met with several investors who requested that we travel to see them. ACOR has received farmout requests for a portion of ACOR’s 41.5% working interest under PEL 108, 109, & 112 and a portion of ACOR’s 100% working interest under ATP-582, covering approximately 8,414,348 gross acres. Both areas are located in the Cooper/Eromanga Basin in South Australia and Queensland. ACOR management is seriously reviewing the farmout requests. Results of the meetings will be shared with you in forthcoming press releases.

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 interest and overriding royalty interest 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.