Drilling Begins on Ubute-1 in Cooper/Eromanga Basin

Australian-Canadian Oil Royalties is pleased to announce that the JV Partner of the Utopia Oil Field states that the drilling operations of the Ubute-1 oil exploration well in ATP 560P located in the prolific Cooper/Eromanga Basin in SW Queensland has begun on ACOR's ORRI.

The Ubute-1 well is being drilled by the ADS Rig 6. Ubute-1 lies in the Utopia Block.

Ubute-1 will be the first of 3 wells to be drilled at ACOR's Utopia Oil Field in the next six (6) weeks.

Ubute-1 is primarily targeting oil in the Murta Formation and in the Wyandra Sandstone. Oil is proved and being produced from these zones in offsetting wells at the Talgeberry Field to the west, and Utopia Field to the south. The well will test secondary targets in the Namur Sandstone, Westbourne Formation, Adori Sandstone and Birkhead Formation, all of which produce oil in the area.

Significant oil shows were recorded in two zones in the nearby Toolerah Creek 1 well. The well is part of the joint ventures plan to seek expansion of Murta zone oil surrounding the Utopia Field and will intersect all target formations in a four-way dip closure.

It is planned to tag the Late Devonian age basement at TD of around 4,429 feet. The closure of the Ubute prospect covers an area of approximately 1.24 miles and is targeting approximately 500,000 barrels of oil recoverable at the Murta Level.

Oil from the Utopia field is sold and trucked to the nearby Eromanga refinery.

ACOR owns a 25% of 1% ORRI under ATP-560, which includes the Utopia Oil Field.

About The Utopia Oil Field:

The Utopia Oil Field is located in the prolific Cooper/Eromanga Basin in Queensland Australia. The Utopia Oil Field produces light, sweet oil from sands in the early Cretaceous Murta member, trapped in a low relief anticline. The Utopia Oil Field is the largest known Murta field in the Queensland sector of the Eromanga Basin and is severely underdeveloped.

A 2004 review indicated a relatively large pool, with possible recoverable oil reserve estimates of approximately 2.86 million barrels of oil (P50) on ACOR's ORRI.

Cooper/Eromanga Basin Flood Update-

After several months of delays due to heavy rains and flooding, parts of the Cooper/Eromanga Basin are finally allowing some operators to resume operations and drilling plans.

Heavy rain in 2010 saw much of Queensland & parts of South Australia undergo major flooding.

The floods that coursed through parts of the Cooper/Eromanga Basin have played havoc with oil & gas production for the basin's operators on ACOR's ORRI's & Working Interest.

The floods were caused by rainfall generated by a monsoon trough described by a Bureau of Meteorology forecaster as "almost like a tropical cyclone over land."

The floods were described by the Queensland Minister for Primary Industries Tim Mulherin as the "worst flood in 120 years."