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 JUNE 30, 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 19,848,284 shares of common stock, No Par Value,
                        outstanding as of July 15, 2010


<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



















<PAGE>
<TABLE>
<CAPTION>
<S>                                                             <C>               <C>


                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
                                 BALANCE SHEETS

                                                                    JUNE 30,     DECEMBER 31,
                                                                     2010            2009
                                                                ------------     ------------
                                                                  (unaudited)
                                     ASSETS

CURRENT ASSETS
   Cash                                                         $      4,799      $      6,262
   Accounts receivable                                                 4,910             9,150
                                                                ------------      ------------
         Total Current Assets                                          9,709            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                           (179,240)         (171,665)
                                                                ------------      ------------
         Net Property and Equipment                                  967,147           974,722
                                                                ------------      ------------
OTHER ASSETS                                                           1,084             1,084
                                                                ------------      ------------
         TOTAL ASSETS                                           $    977,940      $    991,218
                                                                ------------      ------------
                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                             $     14,003      $        950
   Accrued expenses                                                  107,752            98,066
   Loans from officers                                                25,000            25,000
                                                                ------------      ------------
         Total Current Liabilities                                   146,755           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
        19,848,284 and 18,327,030 shares in 2010 and 2009
         issued and outstanding)                                   3,722,099         3,697,099
   Additional paid in capital                                        171,952           170,352
   Accumulated deficit                                            (3,062,866)       (3,000,249)
                                                                ------------      ------------
         Total Stockholders' Equity                                  831,185           867,202
                                                                ------------      ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $    977,940      $    991,218
                                                                ============      ============





                See accompanying notes to financial statements.
</TABLE>


                                      -1-


<PAGE>


<TABLE>
<CAPTION>

                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.

                            STATEMENTS OF OPERATIONS
        For the Three Months and Six Months Ended June 30, 2010 and 2009
                                  (Unaudited)


                                           Three Months              Six Months
                                      2010          2009        2010        2009
                                   ----------   ----------   ----------   ----------
<S>                                <C>          <C>          <C>          <C>
OIL AND GAS REVENUES               $   (2,906)  $    8,156   $   13,784   $   28,271

COST OF SALES
   Production taxes                      --           --             19         --
   Transportation costs                 1,263        2,826        1,263        6,423
   Depletion                            3,695       17,281        7,391       34,562
                                   ----------   ----------   ----------   ----------
     GROSS PROFIT/LOSS                 (7,864)     (11,951)       5,111      (12,714)
                                   ----------   ----------   ----------   ----------
OPERATING EXPENSES
   Personnel costs                      5,313       22,510       16,969       36,471
   Professional fees                    6,412        6,601       37,597       25,517
   Promotion and advertising            1,647        3,037        6,245       10,843
   Office expenses                        558        1,278        2,052        5,007
   Depreciation                          (345)         530          185        1,060
   Directors' fees and other              431          528          951        1,821
                                   ----------   ----------   ----------   ----------
         Total Operating Expenses      14,016       34,484       63,999       80,719
                                   ----------   ----------   ----------   ----------
OPERATING LOSS                        (21,880)     (46,435)     (58,888)     (93,433)

OTHER INCOME/(EXPENSE)
   Interest income                       --           --           --            959
   Interest expense                      (289)      (1,417)        (754)      (9,488)
                                   ----------   ----------   ----------   ----------
NET LOSS BEFORE INCOME TAXES          (22,169)     (47,852)     (59,642)    (101,962)

   Australian income taxes             (1,717)       1,267        2,975        6,449
                                   ----------   ----------   ----------   ----------
NET LOSS                           $  (20,452)  $  (49,119)  $  (62,617)  $ (108,411)
                                   ==========   ==========   ==========   ==========



BASIC (LOSS) PER COMMON SHARE      $    (0.00)  $    (0.00)  $    (0.00)  $    (0.01)
                                   ==========   ==========   ==========   ==========
Weighted Average Number of Common
  Shares Outstanding:
      Basic                        19,587,745   16,955.851   19,556,255   16,745,683
                                   ==========   ==========   ==========   ==========




                See accompanying notes to financial statements.
</TABLE>


                                      -2-

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<TABLE>
<CAPTION>

                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
                            STATEMENTS OF CASH FLOWS
                For the Six Months Ended June 30, 2010 and 2009
                                  (Unaudited)

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

<S>                                                  <C>               <C>
Net loss                                             $   (62,617)      $  (108,411)
Adjustments to reconcile net (loss) to net cash
     provided by operations:
         Depreciation, depletion and amortization          7,576            35,622
         Value of expenses contributed by officers         1,600             1,600
         Stock issued for services                          --               5,000
Changes in:
     Receivables                                           4,240             2,332
     Accounts payable and accrued expenses                22,738            (6,519)
                                                     -----------       -----------
NET CASH (USED) BY OPERATING ACTIVITIES                  (26,463)          (70,376)
                                                     -----------       -----------
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 sale of common stock                    25,000              --
    Proceeds from notes payable to officers                 --              43,360
     Surrender of certificate of deposit                    --           1,000,000
     Reduction in notes payable to bank                     --          (1,000,000)
                                                     -----------       -----------
NET CASH FLOWS PROVIDED FROM FINANCING ACTIVITIES         25,000            43,360
                                                     -----------       -----------
NET (DECREASE) IN CASH                                    (1,463)          (28,127)

         Cash, Beginning of Period                         6,262            42,677
                                                     -----------       -----------
         Cash, End of Period                         $     4,799       $    14,550
                                                     ===========       ===========


SUPPLEMENTAL DISCLOSURES:
     Cash payments for:
         Interest                                    $      --         $      --
                                                     ==========       ===========
         Australian income taxes                     $     2,975       $     6,449
                                                     ==========       ===========
     Non-Cash Investing and Financing Activities:
         Reduction in notes payable to officers      $      --         $   (68,360)
         Reduction in accrued expense                       --              (2,103)
         Stock issued for notes payable to officers         --              70,463
                                                     -----------       -----------
                                                     $      --         $      --
                                                     ==========       ===========


                See accompanying notes to financial statements.
</TABLE>


                                      -3-

<PAGE>

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

                                 June 30, 2010
                                  (Unaudited)


NOTE 1: BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles 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 six-month period
ended June 30, 2010, are not necessarily indicative of the results that may be
expected for the year ending December 31, 2010.

NOTE 2: GOING CONCERN CONSIDERATIONS

The Company neither has sufficient cash on hand nor is it generating sufficient
revenues to cover its operating overhead. These facts raise doubt as to the
Company's ability to continue as a going concern. The Company has been operating
over the past year based on loans/stock purchases from its officers/directors.
There is no guarantee that such officers/directors will continue to provide
operating funds for the Company. In order to pursue its goals and commitments
under the Australian concession prospects that it has obtained, the Company will
be required to obtain significant funding or to exchange all or portions of its
interests in those concessions to meet the minimum expenditure requirements
underlying the concessions. Management's plans include attempting to find a
drilling company to farm out the working interests under the concessions,
raising 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's plans will be successful.




                                      -4-

<PAGE>


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN 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 result 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
June 30, 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 complete its planned exploration activities and explore
other oil and gas opportunities is dependent on adequate capital resources being
available and equity being obtained and/or find partners to fund the exploration
and drilling programs on the areas in which the Company holds working interests.

                                      -5-

<PAGE>



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 t2008, 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 13,430 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.

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.

                                      -6-

<PAGE>



The principal assets of ACOR are oil and gas properties (both those being
amortized and those not being amortized) reported at $1,121,604 on June 30, 2010
with no changes since December 31, 2009. The nominal decrease in assets from
December 31, 2009 to June 30, 2010 is related to a decrease in cash and accounts
receivable in addition to an increase in accumulated depreciation of property &
equipment.

The Total Current Assets decreased from December 31, 2009 to June 30, 2010 from
$15,412 to $9,709. The Company's Total Current Assets as of June 30, 2010, was
$9,709 with Total Current Liabilities of $146,755, giving a liquidity ratio of
..066 to 1. The Company's cash position was $4,799 on June 30, 2010 compared to
$6,262 and $14,550 on December 31, 2009 and June 30, 2009 respectively. The
fluctuations in current assets from June 30, 2009 compared to December 31, 2009
and June 30, 2010 is directly related to the amount of cash on hand.

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

Stockholders' Equity increased when comparing June 30, 2010 to December 31,
2009, being $831,185 and $867,202 respectively, due to less cash on hand.

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.

During the quarter ended June 30, 2010 the Company issued to an accredited
investor 357,143 restricted common shares for $25,000. The number of shares
issued and outstanding as of June 30, 2010 was 19,848,284.

RESULTS OF OPERATIONS

Oil and gas revenues accrued from prior periods caused the quarter ended June
30, 2010 to report a negative $2,906 and an adjustment was made during this
quarter. Revenues of $8,156 were reported for the quarter ended June 30, 2009.
Oil and gas revenues reported for the six months ended June 30, 2010 was $13,784
compared to $28,271 for the six months ended June 30, 2009 reflecting the impact
of decline in oil prices and the decline in flush production from the new
additional wells drilled on concessions ATP 267 and 299. The Australian revenues
were generated from concessions ATP 267, ATP 299, ATP 560 and PEL 115. The
principle revenues were derived from ATP 299 ATP 560 and ATP 267. 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.

                                      -7-

<PAGE>



Total Operating Expenses were $14,016 for the three months ended June 30, 2010
compared to $34,484 for the quarter ended June 30, 2009. The principal reason
for the decrease is personnel costs were lowered from $22,510 to $5,313.

Total Operating Expenses were $63,999 for the six months ended June 30, 2010
compared to $80,719 for the six months ended June 30, 2009. The principal reason
for the decrease is due to personnel costs decreased from $36,471 to $16,969.

The Company's three-month operating loss was $21,880 for the quarter ended June
30, 2010 compared to an operating loss of $46,435 for the same period in 2009.
As stated above, the decrease in personnel costs caused operating losses to
decrease.

The Company did not report any interest income for the quarters ended June 30,
2009 and June 30, 2010. The Company did not report any interest income for the
six months ended June 30, 2010 however the Company did have interest income of
$959 for the six months ended June 30, 2009. The Company's interest expense for
the three-months ended June 30, 2010 was $289 compared to $1,417 for the same
period ended in 2009. The Company's interest expense for the six months ended
June 30, 2010 was $754 compared to $9,488 for the six-months ended June 30,
2009.

The net loss for the three months ended June 30, 2010 was $20,452 compared to a
net loss of $49,119 for the quarter ended June 30, 2009. The decrease in net
loss is primarily attributable a decrease in personnel costs. The net loss for
the six months ended June 30, 2010 was $62,617 compared to a net loss of
$108,411 for the six months June 30, 2009.

SUBSEQUENT EVENTS

There were no significant subsequent events to report since the June 30, 2010.

PLAN OF OPERATION AND FUNDING

The Company plans to seek additional oil and gas concessions in Australia on
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.

                                      -8-

<PAGE>



MATERIAL COMMITMENTS

The Company as of June 30, 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 interests 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 second quarter of 2010, the Company paid $4,456 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 June 30, 2010, the Company had no off-balance sheet arrangements.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENT

The forward-looking statements in this Form 10-Q reflect the Company's current
views with respect to future events and financial performance. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ from those anticipated. In the Form 10-Q,
the words "anticipates," "believes," "expects," "intends," "future," and similar
expressions identify forward-looking statements. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that may arise after the date hereof. All subsequent written or
oral forward-looking statements attributable to the Company or persons acting on
its behalf are expressly qualified in their entirety by this section.


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.

                                      -9-

<PAGE>



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.

As of June 30, 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 June 30, 2010 that have materially affected or are
reasonably likely to materially affect our internal controls.

                           PART II. OTHER INFORMATION


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

      Reports on Form 8-K - Filed March 20, 2009 for change in Chief Financial
      Officer


                                   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: August 2, 1010             /s/ MAHNAZ NOURMAND
                                 By:  Mahnaz  Nourmand, Principal
                                      Financial Officer

                                      -10-