UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                    FOR QUARTERLY PERIOD ENDED MARCH 31, 2010

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

         For the transition period from _____________ to _____________.

                           Commission File No. 0-29832

                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
                     --------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

   British Columbia, Canada                                      75-2712845
------------------------------                                -----------------
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                               Identification #)

      1301 Avenue M, Cisco, TX                                      76437
----------------------------------------                          ----------
(Address of Principal Executive Offices)                          (Zip Code)

                                 (254) 442-2638
                -------------------------------------------------
                Registrant's Telephone Number Including Area Code

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company.

[ ] Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer
[X] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

          There were 19,491,141 shares of common stock, No Par Value,
                         outstanding as of May 5, 2010
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                 March 31,     December 31,
                                                                    2010           2009
                                                                -----------    -----------
                                                                (unaudited)
<S>                                                             <C>            <C>
                                     ASSETS
CURRENT ASSETS
   Cash                                                         $    11,859    $     6,262
   Accounts receivable                                               10,595          9,150
                                                                -----------    -----------
         Total Current Assets                                        22,454         15,412
                                                                -----------    -----------
PROPERTY AND EQUIPMENT
   Oil and gas properties-being amortized                           363,176        363,176
   Oil and gas properties-not being amortized                       758,428        758,428
   Office equipment and software                                     24,783         24,783
   Accumulated depreciation and depletion                          (175,889)      (171,665)
                                                                -----------    -----------
         Net Property and Equipment                                 970,498        974,722
                                                                -----------    -----------
OTHER ASSETS                                                          1,084          1,084
                                                                -----------    -----------
         TOTAL ASSETS                                           $   994,036    $   991,218
                                                                ===========    ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Accounts payable                                             $    36,869    $       950
   Accrued expenses                                                 106,327         98,066
   Loans from officers                                               25,000         25,000
                                                                -----------    -----------
         Total Current Liabilities                                  168,196        124,016
                                                                -----------    -----------
STOCKHOLDERS' EQUITY
   Preferred stock no par value (50,000,000 shares authorized
        none outstanding)                                                --             --
   Common stock, no par (50,000,000 shares authorized
        19,491,141 and 19,491,141 shares in 2010 and 2009
         issued and outstanding)                                  3,697,099      3,697,099
   Additional paid in capital                                       171,152        170,352
   Accumulated deficit                                           (3,042,411)    (3,000,249)
                                                                -----------    -----------
         Total Stockholders' Equity                                 825,840        867,202
                                                                -----------    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $   994,036    $   991,218
                                                                ===========    ===========
</TABLE>
<PAGE>

                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.

                            STATEMENTS OF OPERATIONS
               FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
                                   (UNAUDITED)

                                                 2010            2009
                                             ------------    ------------
OIL AND GAS REVENUES                         $     16,690    $     16,518

COST OF SALES
   Production taxes                                    19              --
   Depletion                                        3,695          17,281
                                             ------------    ------------
     GROSS PROFIT                                  12,976            (763)
                                             ------------    ------------
OPERATING EXPENSES
   Personnel costs                                 11,656          14,020
   Professional fees                               31,185          18,916
   Promotion and advertising                        4,597           7,805
   Office expenses                                  1,494           3,670
   Depreciation                                       530             530
   Directors' fees and other                          520           1,293
                                             ------------    ------------
         Total Operating Expenses                  49,982          46,234
                                             ------------    ------------
OPERATING LOSS                                    (37,006)        (46,997)

OTHER INCOME/(EXPENSE)
   Interest income                                     --             959
   Interest expense                                  (465)         (8,071)
                                             ------------    ------------
NET LOSS BEFORE INCOME TAXES                      (37,471)        (54,109)
   Australian income taxes                          4,692           5,182
                                             ------------    ------------
NET LOSS                                     $    (42,163)   $    (59,291)
                                             ============    ============
BASIC (LOSS) PER COMMON SHARE                $      (0.00)   $      (0.00)
                                             ============    ============
Weighted average number of common shares
outstanding:                                   19,491,141      16,465,458
                                             ============    ============
<PAGE>

                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.

                            STATEMENTS OF CASH FLOWS
               For the Three Months Ended March 31, 2010 and 2009
                                   (Unaudited)

                                                         2010           2009
                                                     -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                             $   (42,163)   $   (59,291)
Adjustments to reconcile net (loss) to net cash
     provided by operations:
         Depreciation, depletion and amortization          4,225         17,811
         Value of expenses contributed by officers           800            800
         Stock issued for services                            --             --
Changes in:
     Receivables                                          (1,445)        (2,871)
     Accounts payable and accrued expenses                44,180         19,849
                                                     -----------    -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES           5,597        (23,702)
                                                     -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITITES:
     Acquisition of office equipment                          --         (1,111)
                                                     -----------    -----------
NET CASH FLOWS (USED) BY INVESTING ACTIVITIES:                --         (1,111)
                                                     -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from notes payable to officers                  --         12,360
     Surrender of certificate of deposit                      --      1,000,000
     Reduction in notes payable to bank                       --     (1,000,000)
                                                     -----------    -----------
NET CASH FLOWS PROVIDED FROM FINANCING ACTIVITIES             --         12,360
                                                     -----------    -----------
NET INCREASE (DECREASE) IN CASH                            5,597        (12,453)

         Cash, Beginning of Period                         6,262         42,677
                                                     -----------    -----------
         Cash, End of Period                         $    11,859    $    30,224
                                                     ===========    ===========
SUPPLEMENTAL DISCLOSURES:
     Cash payments for:
         Interest                                    $        --    $        --
                                                     ===========    ===========
         Australian income taxes                     $     4,692    $     5,182
                                                     ===========    ===========
<PAGE>

                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
                  SELECTED INFORMATION FOR FINANCIAL STATEMENTS

                                 March 31, 2010
                                   (Unaudited)

NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principals for interim financial information
and with the instructions of Regulation S-B. They do not include all information
and footnotes required by generally accepted accounting principles for complete
financial statements. However, except as disclosed herein, there has been no
material change in the information included in the Company's Report on Form 10-K
for the year ended December 31, 2009. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three-month
period ended March 31, 2010, are not necessarily indicative of the results that
may be expected for the year ending December 31, 2010.

NOTE 2: GOING CONCERN CONSIDERATIONS

As of March 31, 2010, the Company has limited disposable cash and its revenues
are not sufficient to, and cannot be projected to, cover operating expenses and
expansion by the Company. These factors raise substantial doubt as to the
ability of the Company to continue as a going concern. Management's plans
include attempting to raise funds from the public through a stock offering, and
attempting to acquire additional producing interests in exchange for stock.
Management intends to make every effort to identify and develop sources of
funds. There is no assurance that Management will be successful. The Company is
effectively debt free and could continue to operate at subsistence levels
pending development of funding sources.
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Any statements that are contained in this Form 10-Q that are not statements of
historical fact are forward-looking statements. Readers can identify these
statements by words such as 'may,' 'will,' 'expect,' 'anticipate,' 'estimate,'
'continue' or other similar words. These statements discuss future expectations,
contain projections of results of operations or financial condition or state
other forward-looking information and are based on certain assumptions and
analyses made by the Company in light of its experience and its perception of
historical trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, including such
factors as uncertainties in cash flow, expected costs of litigation, the outcome
of litigation, the potential impact of government regulations and rulings,
fluctuations in the economic environment and other such matters, many of which
are beyond the control of the Company. Readers are cautioned that
forward-looking statements are not guarantees of future performance and that
actual results or developments may differ materially from those expressed or
implied in the forward-looking statements.

The following discussion and analysis should be read in conjunction with the
Company's financial statements and notes thereto as of December 31, 2009 and
March 31, 2010 and 2009, for the respective periods then ended.

GENERAL DISCUSSION:

The Company's strategy is two fold: 1) to seek overriding royalty interests in
oil and gas concessions within sedimentary basins in Australia, and 2) to seek
working interests in oil and gas concessions within sedimentary basins of
Australia to promote oil and gas exploration through seismic programs and
drilling operations.

The Company's ability to explore other oil and gas opportunities is dependent on
adequate capital resources being available and equity being obtained, and/or
finding partners to fund the exploration and drilling programs on the areas in
which the Company holds working interests.

ACOR began its movement from being primarily an oil royalty company to an
exploration company in 2000 when ACOR et al was awarded three large concessions
in South Australia. The risk of exploration was downgraded by the success rate
by new junior oil companies in the Cooper/Eromanga Basin averaging 52%. ACOR
entered into a farm-out arrangement with Holloman Energy Corp. to drill three
wells retaining a 13.8325% carried working interest. During 2008, Holloman
drilled the Pecos #1 well on PEL 112, being the first of the three well program.
The Pecos #1 was completed as a dry hole. During 2008 Holloman obtained approval
from the South Australian Government for new exploration terms giving a new
five-year work program for PEL 112 and consolidating PEL 108 & 109 to a new
exploration permit PEL 444. The Company's terms and conditions mentioned above
remain in force on these two permits. Holloman is seeking joint venture partners
to conduct additional seismic and drill several wells.

A 12" pipeline was constructed to the Longtom Field with the first delivery of
gas beginning on October 21, 2009 on VIC/P54. Revenues from gas sales for the
Company are expected to begin during the first half of 2010. The Longtom #4
tested 58 million cubic feet of gas per day with liquid hydrocarbons. The net
pay section in both Longtom #3 & #4 is 4,000 feet thick and the total depth of
both wells was approximately 15,000 feet.

ACOR has overriding royalty interests under 14,554,504 gross surface acres in
the Cooper/Eromanga, Bass Strait of the Gippsland Basin and Carnarvon Basin plus
has working interests under 7,914,460 gross surface acres.

LIQUIDITY AND CAPITAL RESOURCES

The Company has historically addressed its long-term liquidity needs for the oil
and gas exploration and development for its Australian working interests.
Through the use of farm-out agreements the Company sells a portion of its
ownership interest in the concession to an outside party who is then responsible
for the exploration activities i.e. seismic, drilling etc. This is the strategy
that management is following in order to meet the expenditure requirements on
the Australian concessions.
<PAGE>

In addition, the Company may also satisfy its future capital requirements by
selling its common stock. Should the Company become unable to reach satisfactory
farm-out arrangements or obtain financing from the sale of its securities or
some other source, the Company may not be able to achieve some of its future
goals.

The principal assets of ACOR are oil and gas properties. On March 31, 2010 the
Company reported $970,498 in total net property and equipment compared to
$955,812 on March 31, 2009 and $974,722 on December 31, 2009. The increase
incurred from March 31, 2009 to March 31, 2010 is due to an acquisition of a
small non-producing overriding royalty interest located in the Carnarvon Basin
of Western Australia.

The Total Current Assets decreased from March 31, 2009 from $43,994 to $22,454
on March 31, 2010. The Current Assets on December 31, 2009 were $15,412. The
Company's Total Current Assets as of March 31, 2010, was $22,454 with Total
Current Liabilities of $168,196 giving a liquidity ratio of .13 to 1. The
Company's Total Current Assets as of March 31, 2009, was $43,994 with Total
Current Liabilities of $164,983, giving a liquidity ratio of .27 to 1. The
Company's cash position was $11,859 on March 31, 2010 compared to $6,262 and
$30,224 on December 31, 2009 and March 31, 2009 respectively. The fluctuations
in current assets from March 31, 2009 compared to December 31, 2009 and March
31, 2010 is directly related to the amount of cash on hand.

The Company's Total Assets on March 31, 2010 were $994,036 compared to $991,218
on December 31, 2009 and $1,000,980 on March 31, 2009. The decrease in total
assets from March 31, 2009 to March 31, 2010 is related to the combination of
reduction of cash and account receivables.

The Company continues to operate without any long-term debt.

Stockholders' Equity decreased when comparing March 31, 2010 ($825,840) to
December 31, 2009 and March 31, 2009 being $867,202 and $835,907 respectively.
The decrease in stockholders' equity from March 31, 2009 to March 31, 2010 was
attributed to an increase in current liabilities.

Management believes that its current cash balance is sufficient to fund
immediate administrative needs. However, long-term plans are expected to require
significant additional capital and there is not any assurance that the Company
will be able to obtain such funds or obtain the required capital on terms
favorable to the Company.

The Company did not issue any common shares during the quarter ended March 31,
2010. On March 31, 2010 the Company had 19,491,141 common shares issued and
outstanding.

RESULTS OF OPERATIONS

Oil and gas revenues reported for the three months ended March 31, 2010 was
$16,690 compared to $16,518 for the three months ended March 31, 2009, remaining
fairly flat. The Australian revenues were generated from concessions ATP 267,
ATP 299, ATP 560 and PEL 115. The Company holds an overriding royalty interest
of 5.75% of 1% under ATP 299, 25% of 1% under ATP 560 and a 15.15% of 1% under
ATP 267.

Total Operating Expenses were $49,982 for the three months ended March 31, 2010
compared to $46,234 for the quarter ended March 31, 2009. The principal reason
for the increase is due to professional fees increasing from $18,916 to $31,185.
The first quarter's professional fees included legal fees in Australia relating
to registered agent fees totaling $11,185 and the balance was accounting and
audit fees. The other operating expense categories were not materially
different.

The Company's operating loss was $37,006 for the quarter ended March 31, 2010
compared to an operating loss of $46,997 for the same period in 2009. The
Company's reserves as of December 31, 2009 on its producing properties caused
the calculation of the Company's depletion to be lowered which is reflected in
the comparison of the quarter ended March 31, 2009 ($17,281) to March 31, 2010
($3,695). This caused operating losses to be less for the quarter ended March
31, 2010 when comparing these two quarters.
<PAGE>

The Company had interest income for the quarter ended March 31, 2009 of $959 and
no interest income for the quarter ended March 31, 2010. The Company did incur
interest expense of $465 during the quarter ended March 31, 2010 compared to
$8,071 for the quarter ended March 31, 2009. All of the interest expense paid
during the quarter ended March 31, 2010 was paid to officers or directors on
their loans to the Company and the interest paid during the quarter ended March
31, 2009 was on the $1,000,000 bank loan.

The net loss for the three months ended March 31, 20010 was $42,163 compared to
a net loss of $59,291 for the quarter ended March 31, 2009. The decrease in net
loss is primarily attributable to a decrease in the amount of depletion
calculated as previously stated.

PLAN OF OPERATION AND FUNDING

The Company plans to seek additional oil and gas concessions in Australia on a
ground level basis and will seek partners to join in this process. The Company
has been successful in the past (2006 and 2007) to enter into farm-out
arrangements on concessions awarded to the Company and its partners. These
farm-out arrangements have allowed the Company to retain a carried interest and
in some cases receive cash consideration, in addition to deferring the
exploration commitments on concessions to the buyers.

MATERIAL COMMITMENTS

The Company as of March 31, 2010 does not have any material work or exploration
commitments on its oil and gas interests in Australia as the Company has been
successful in entering into farm-out arrangements to transfer those exploration
costs to others in lieu of cash, carried working interest and/or an override.

PURCHASE OF SIGNIFICANT EQUIPMENT

The Company does not intend to purchase any significant equipment during the
year.

RELATED PARTY TRANSACTIONS

During the first quarter of 2010, the Company paid $3,177 for personnel costs
and other expenses to related parties, primarily Secretarial Services, Inc. and
Tensleep Oil & Production, Inc. In addition, the Company reimbursed Australian
Grazing & Pastoral Co., Pty. Ltd. for professional fees. Robert Kamon, the
Company's Secretary, controls these entities.

OFF-BALANCE SHEET ARRANGEMENTS

As of March 31, 2010, the Company had no off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a small reporting company as defined by Rule 12b-2 of the Securities
Exchange Act of 1934 and are not required to provide the information under this
item.

ITEM 4: CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed pursuant to the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules, regulations and related forms, and that
such information is accumulated and communicated to our principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
<PAGE>

As of March 31, 2010, we carried out an evaluation, under the supervision and
with the participation of our principal executive officer and our principal
financial officer of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, our principal
executive officer and our principal financial officer concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this report.

Changes in Internal Controls

There have been no changes in our internal controls over financial reporting
during the quarter ended March 31, 2010 that have materially affected or are
reasonably likely to materially affect our internal controls.

                           PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted for approval.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

         Exhibit 31.1 -- Certification of Chief Financial Officer pursuant to
                         Section 302 of the Sarbanes-Oxley Act of 2002.

         Exhibit 31.2 -- Certification of President and Chief Executive Officer
                         pursuant to Section 302 of the Sarbanes-Oxley Act
                         of 2002.

         Exhibit 32 --   Certification of Chief Executive Officer and Chief
                         Financial Officer pursuant to Section 906 of the
                         Sarbanes-Oxley Act of 2002

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                Australian-Canadian Oil Royalties Ltd.

Date: May 5, 2010               /s/ MAHNAZ NOURMAND
                                ------------------------------------------------
                                By: Mahnaz Nourmand, Principal Financial Officer