Three’s a Charm as ACOR’s Three (3) Offshore Well Drilling Program Kicks off in March in Australia

Offshore Rig Arrives From Singapore to Prolific Gippsland Basin

CISCO, Texas--(BUSINESS WIRE)--Australian-Canadian Oil Royalties Ltd. (herein called ACOR) (OTCBB:AUCAF) is pleased to announce that the drilling of the Coelacanth well on ACOR’s ORRI under VIC/P45 is expected to commence drilling by the 1^st week of March.

The well will be drilled by the brand new West Triton jack-up rig. The West Triton rig has recently arrived all the way from Singapore. After loading up with supplies and equipment on Feb 9^th the rig was towed to the location of the 1^st well in the rig’s multi-well drilling program.

The Coelacanth structure on ACOR’s VIC/P45 is the second well in the West Triton multi-well drilling program. The same drilling rig (West Triton) will also drill on ACOR’s ORRI under VIC/P54 and VIC/P53 as well.

With supply tight and demand high, offshore explorers are having to be innovative to get access to offshore drilling rigs. Rig owners are calling the shots. Rentals have tripled since 2005 for new rig contracts stretching up to 2012.

Worldwide, 3233 oil and gas drilling rigs were active at the end of last year, up 27% from a year earlier, according to a count by global services company Baker Hughes.

An offshore jack-up rig cost an average of $US130,000 ($A165,000) a day in March, compared to a worldwide average of $99,000 a year ago, according to Rigzone.

Rig-sharing agreements are becoming increasingly popular as a way around this dilemma for junior and mid-cap explorers with only one or two wells each to drill.

One Melbourne-based company, recognizing a gap in the market, has even put its own twist on the concept.

Australian Drilling Associates, a firm that specializes in one-stop offshore drilling project management, has brought together six explorers in a deal that will see the newly constructed West Triton rig drilling a minimum of eleven (11) wells, of which four (3) wells will be located on three of ACOR’s ORRI’s under VIC/P45, VIC/P54 and VIC/P53.

The 3 offshore wells to be drilled, beginning in March are listed below:

1. On VIC/P45, the well will target the Coelacanth prospect with estimated reserves of approximately 64,000,000 barrels of oil or approximately $6,400,000,000 at current crude oil prices.
2. On VIC/P54, the operator will drill the development well Longtom 4 to properly development the field and is seeking to possibly increase the already proven reserves of 438 BCF of gas and 4,000,000 barrels of condensate in the Longtom Gas Field or approximately $5,700,000,000 at current crude oil & gas prices.
3. On VIC/P53 the well will target the Bazzard structure with estimated reserves of approximately 35,000,000 barrels of oil or approximately $3,500,000,000 at current crude oil prices.

VIC/P45, VIC/P54 and VIC/P53 are located in the prolific Gippsland Basin in the offshore Australian waters of the Bass Strait.

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 barrels of oil per well or $6,000,000,000 worth of oil per well, at current crude market prices.

About VIC/P45

$31 Billion Oil Company Apache Becomes Operator of ACOR's ORRI under VIC/P45

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’s 1^st structure to be drilled will be at the Coelacanth prospect in VIC-P45, targeting an estimated 64,000,000 barrels of oil. The Coelacanth prospect will be drilled by the West Triton Rig. The structure is stacked pay with a three zone rollup.

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.

VIC/P54

VIC/P54 consists of approximately 155,676 gross acres. The operator of VIC/P54 states in their annual report that their best estimate of the 350 BCF of 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 57,000,000 barrels of oil or approximately $5.7 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 BCF of sales gas from the Longtom field at an agreed price. If Longtom produces in excess of 350 BCF of gas, a joint marketing agreement exists for sales of a further 100 BCF 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.

In 2005, the internationally recognized consultants Gaffney Cline and Associates (GCA) increased their Best Estimate of Longtom Contingent Gas Resources by 38% to 438 BCF.

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 18-19,000,000 cubic feet of gas per day 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 75,000,000 cubic feet of gas per day 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.

The two production tests were conducted on the Longtom 3 well were highly successful. The first test produced gas from the 400 sand at 23,000,000 cubic feet of gas per day. 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 77,000,000 cubic feet of gas per day when bypassing the test separator and 59,000,000 cubic feet of gas per day when flowing through the test separator.

Longtom–4 Development Well Seeks To Possibly Increase Gas Field Reserves

The Longtom-4 development well will be drilled by the West Triton Rig and is expected to 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.

The 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.

ACOR owns 1/20th of 1% ORRI under VIC/P54.

About VIC/P53

VIC/P53 consists of approximately 182,858 gross acres. VIC/P53 is also called the "Hole of the Doughnut" as it is surrounded by 9 giant producing oil & gas fields, leaving VIC/P53 in the middle.

The JV partner will drill an exploration well called Bazzard-1, to test a four-way dip closure that the JV partner believes could hold approximately 30-50 million barrels of oil. The Bazzard-1 well will be drilled by the West Triton Rig.

The Bazzard 3D, recorded from early March 2005, has provided the newest dataset that the JV partner used to identify and rank prospects for drilling by 2008.

The 3D was aimed at providing finer delineation of a number of pre-existing leads, including Cod West, Updip Veilfin, Catfish, Bazzard, Spineback and Hake, with a secondary objective of identifying any additional Latrobe Group targets that may exist.

The nine giant oil & gas fields that surround ACOR's ORRI under VIC/P53 have some very impressive production figures, see below.

It is important to note that the fields listed below are still producing.

1. Kingfish Field was discovered in 1967 and has produced 1,100,000,000 barrels of oil or $110,000,000,000 at current market prices of $100.00 per barrel from 41 wells.
2. Bream Field started drilling in 1988 and has produced 88,000,000 barrels of oil or $8,800,000,000 at current market prices of $100.00 per barrel from 20 wells.
3. Barracouta Field started drilling in 1968 and has produced 1.1 TCF of gas or $2,750,000,000 at $2.50 per mcf gas prices from 10 wells.
4. Snapper Field started drilling in 1968 and has produced 630 BCF of gas or $1,575,000,000 at $2.50 per mcf gas prices from 23 wells. The nearest well in the Snapper Field is approx. 1 mile from ACOR's VIC/P53 lease line. ACOR's Seismic work shows a seismic high coming from the Snapper Field possibly extending over into Permit 53. The Snapper Field has produced an avg. of approximately 105 BCF of gas per well.
5. Marlin Field started drilling in 1968 and has produced 2.4 TCF of gas or $6,000,000,000 at $2.50 per mcf gas prices from 19 wells.
6. Fortesque Field started drilling in 1982 and has produced 260,000,000 barrels of oil or $26,000,000,000 at current market prices of $100.00 per barrel from 28 wells.
7. Halibut Field started drilling in 1969 and has produced 820,000,000 barrels of oil or $82,000,000,000 at current market prices of $100.00 per barrel from 14 wells.
8. Cobia Field started drilling in 1983 and has produced 135,000,000 barrels of oil or $13,500,000,000 at current market prices of $100.00 per barrel from 20 wells.
9. Mackerel Field started drilling in 1977 and has produced 450,000,000 barrels of oil or $45,000,000,000 at current market prices of $100.00 per barrel from 22 wells.

VIC/P53 is considered prospective for oil and gas at the top Latrobe and also at deeper intra Latrobe levels. VIC/P53 is surrounded by the oil and gas producing fields held by EXXON/BHP.

The location, adjacent to this infrastructure, and proximity to pipelines, processing facilities and major markets, offers potential advantage through infrastructure savings and gives encouragement to participation in VIC/P53. The hydrocarbons recorded at Veilfin-1 established the existence of a working petroleum system in the permit area.

ACOR owns 3/20ths of 1% ORRI under VIC/P53.

So what is 3/20ths of 1% ORRI possibly worth?

3/20ths of 1% may not sound like a like a lot. But, for example if you owned a 3/20ths of 1% ORRI under the Kingfish Oil Field* and if the Kingfish field produced 1,100,000,000 barrels of oil and the operator was able to sell the oil produced for an average of $100 per barrel, then your 3/20ths of 1 % would have generated in revenue approximately $165,000,000 before taxes.

(*Reminder: This was merely an example, ACOR does not own any ORRI’s under the Kingfish oil Field and there are no guarantees a similar performance).

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.