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 SEPTEMBER 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 Exchange Act during the past 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 smaller reporting company.
(Check one):

         Large accelerated filer    _____         Accelerated filer _____
         Non-accelerated filer _____              Smaller Reporting Company   X

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  20,048,284  shares of common stock, No Par Value, outstanding as of
September 30, 2010.

<PAGE>
PART 1. FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS

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<CAPTION>
<S>                                                                    <C>            <C>

                                AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.
                                            BALANCE SHEETS


                                                                        September 30,     December 31,
                                                                             2010           2009
                                                                         (unaudited)
                                                ASSETS

CURRENT ASSETS
   Cash                                                                $     11,527   $      6,262
   Accounts receivable                                                       14,457          9,150
                                                                       ------------   ------------
         Total Current Assets                                                25,984         15,412
                                                                       ------------   ------------
PROPERTY AND EQUIPMENT
   Oil and gas properties-being amortized                                   389,442        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                                  (183,028)      (171,665)
                                                                       ------------   ------------
         Net Property and Equipment                                         989,625        974,722
                                                                       ------------   ------------
OTHER ASSETS
         Investment in equity method investee                                 1,084          1,084
                                                                       ------------   ------------
         TOTAL ASSETS                                                  $  1,016,693   $    991,218
                                                                       ============   ============

                                 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                                    $     13,845   $        950
   Accrued expenses                                                         111,244         98,066
   Loans from officers                                                       25,000         25,000
   Other loans - related parties                                             26,266           --
                                                                       ------------   ------------
         Total Current Liabilities                                          176,355        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
        20,048,284 and 19,491,141 shares, respectively,
         issued and outstanding)                                          3,745,099      3,697,099
   Additional paid in capital                                               172,752        170,352
   Accumulated (deficit)                                                 (3,077,513)    3,000,249)
                                                                       ------------   ------------
         Total Stockholders' Equity                                         840,338        867,202
                                                                       ------------   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $  1,016,693   $    991,218
                                                                       ============   ============

See accompanying notes to financial statements.
</TABLE>


<PAGE>

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                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.

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


                                                Three Months                      Nine Months
                                         2010            2009             2010              2009
                                   --------------   --------------   --------------   ----------------

OIL AND GAS REVENUES               $       38,903   $       13,291   $       52,686   $         41,227

COST OF SALES
   Production taxes                            70               14               90                 14
   Depletion                                3,695           17,281           11,086             51,843
   Transportation costs                     2,396            2,468            3,659              8,556
                                   --------------   --------------   --------------   ----------------
     GROSS PROFIT/LOSS                     32,742           (6,472)          37,851            (19,186)
                                   --------------   --------------   --------------   ----------------

OPERATING EXPENSES
   Personnel costs                         18,414           47,959           35,382             84,381
   Professional fees                        5,841            5,377           43,438             30,894
   Promotion and advertising                2,357            4,229            8,602             15,072
   Office expenses                            977            1,894            3,029              6,949
   Depreciation                                93              530              278              1,590
   Directors' fees and other               14,854           36,569           15,806             38,390
                                   --------------   --------------   --------------   ----------------
         Total Operating Expenses          42,536           96,558          106,535            177,276
                                   --------------   --------------   --------------   ----------------

OPERATING LOSS                             (9,794)        (103,030)         (68,684)          (196,462)

OTHER INCOME/(EXPENSE)
   Interest income                           --               --               --                  959
   Interest expense                          (394)         (44,772)          (1,148)           (54,261)
                                   --------------   --------------   --------------   ----------------

NET LOSS BEFORE INCOME TAXES              (10,188)        (147,802)         (69,832)          (249,764)

   Australian income taxes                  4,458            2,917            7,432              9,366
                                   --------------   --------------   --------------   ----------------
NET LOSS                           $      (14,646)  $     (150,719)  $      (77,264)  $       (259,130)
                                   ==============   ==============   ==============   ================



BASIC (LOSS) PER COMMON SHARE      $        (0.00)  $        (0.01)  $        (0.00)  $          (0.01)
                                   ==============   ==============   ==============   ================

Weighted Average Number of Common
  Shares Outstanding:
      Basic                            19,920,005       18,612,288       19,686,719         17,334,190
                                   ==============   ==============   ==============   ================


See accompanying notes to financial statements.
</TABLE>


<PAGE>
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                     AUSTRALIAN-CANADIAN OIL ROYALTIES LTD.

                            STATEMENTS OF CASH FLOWS
             For the Nine Months Ended September 30, 2010 and 2009
                                  (Unaudited)

                                                                                2010             2009
                                                                           ------------   -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)                                                                 $    (77,264)  $    (259,130)
                                                                           ------------   -------------
Adjustments to reconcile net (loss) to net cash
     provided by operations:
         Depreciation and depletion                                              11,364          53,433
         Value of expenses contributed by officers                                2,400           2,400
         Stock issued for services                                               10,000          35,000
         Stock issued for director fees                                          13,000          32,500

Changes in:
             Receivables                                                         (5,307)          2,894
             Accounts payable and accrued expenses                               26,072          38,044
                                                                           ------------   -------------

NET CASH USED BY OPERATING ACTIVITIES                                           (19,735)        (94,859)
                                                                           ------------   -------------

CASH FLOWS USED BY INVESTING ACTIVITITES:
         Acquisition of office equipment                                           --            (1,111)
         Acquisition of oil and gas properties                                  (26,266)           --
                                                                           ------------   -------------
NET CASH FLOWS USED BY INVESTING ACTIVITIES:                                    (26,266)         (1,111)
                                                                           ------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
         Proceeds from sale of common stock                                      25,000            --
         Proceeds from notes payable to officers                                   --            68,360
         Proceeds from notes payable to related parties                          26,266            --
         Surrender of certificate of deposit                                       --         1,000,000
         Reduction in notes payable to bank                                        --        (1,000,000)
                                                                           ------------   -------------
NET CASH FLOWS FROM FINANCING ACTIVITIES                                         51,266          68,360
                                                                           ------------   -------------

NET (DECREASE) INCREASE IN CASH                                                   5,265         (27,610)

         Cash, Beginning of Period                                                6,262          42,677
                                                                           ------------   -------------

         Cash, End of Period                                               $     11,527   $      15,067
                                                                           ============   =============
SUPPLEMENTAL CASH FLOW INFORMATION:
     Interest and Income Taxes Paid:
         Interest                                                          $      1,148   $      59,554
                                                                           ============   =============
         Income taxes - Australian                                         $      7,432   $       9,366
                                                                           ============   =============
     Non-Cash Transactions:
         Stock issued for:
              Payment of notes to shareholders including interest accrued  $       --     $    (140,553)
                  Stock issued for payment of shareholders notes                   --           140,553
                                                                           ------------   -------------
                                                                           $          0   $           0
                                                                           ============   =============


See accompanying notes to financial statements.
</TABLE>






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

                               September 30, 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-KSB 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 nine-month
period ended September 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.

<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
September 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.

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's overriding royalty interest began during the quarter ended September
30, 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 depth of the wells was approximately 15,000 feet. The Company holds a 5%
of 1% overriding royalty in the Longtom Gas Field.

<PAGE>



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.

The principal assets of ACOR are oil and gas properties (both those being
amortized an those not being amortized) reported at $1,147,870 on September 30,
2010 with an increase of $26,266 since December 31, 2009. The nominal increase
in assets from December 31, 2009 to September 30, 2010 is related to a the
capitalization of rental payments on ATP 582 in Queensland, Australia in which
the Company owns 100% working interest.

The Total Current Assets increased from December 31, 2009 to September 30, 2010
from $15,412 to $25,984. The Company's Total Current Assets as of September 30,
2010, was $25,984 with Total Current Liabilities of $176,355, giving a liquidity
ratio of .147 to 1. The Company's cash position was $11,527 on September 30,
2010 compared to $6,262 on December 31, 2009. The fluctuations in current assets
from December 31, 2009 and September 30, 2010 are directly related to the amount
of cash on hand and the amount of receivables outstanding from revenues not
received.

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

Stockholders' Equity decreased when comparing September 30, 2010 to December 31,
2009 being $840,338, $867,202 respectively, due 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.

<PAGE>



During the nine-months ended September 30, 2010 the Company issued to an
accredited investor 357,143 restricted common shares for $25,000. During the
quarter ended September 30, 2010 the Company issued 100,000 common shares to two
of its directors based on $0.13 per share and 100,000 shares were issued for
consulting services based on $0.10 per share. The number of shares issued and
outstanding as of September 30, 2010 was 20,048,284

RESULTS OF OPERATIONS

Revenues of $38,903 were reported for the quarter ended September 30, 2010
compared to $13,291 for the same period in 2009. The increase in revenues is
caused by the Company's interest in the Longtom Gas Field in the Bass Strait to
come on line from which the Company received $19,573 for the first six months
gas sales. The remainder of the increase is caused by an improvement in the
price of oil. Oil and gas revenues reported for the nine-months ended September
30, 2010 was $52,686 compared to $41,227 for the nine-months ended September 30,
2009 reflecting the impact of the Company's overriding royalty interest in the
Longtom Gas Field. The Australian revenues were generated from concessions ATP
267, ATP 299, ATP 560 and PEL 115. The principle revenues were derived from
VicP54, ATP 299 ATP 560 and ATP 267. The Company holds an overriding royalty
interest of 5% of 1% under VicP54, 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 $42,536 for the three months ended September 30,
2010 compared to $96,558 for the quarter ended September 30, 2009. The principal
reasons for the decrease is personnel costs were lowered from $47,959 to $18,414
and director's fees and other expenses were lowered from $36,569 to $14,854.

Total Operating Expenses were $106,535 for the nine-months ended September 30,
2010 compared to $177,276 for the nine-months ended June 30, 2009. The principal
reason for the decrease is due to Personnel costs decreased from $84,381 to
$35,382 and director's fees and other expenses decreased from $38,390 to
$15,806.

The Company's three-month operating loss was $9,794 for the quarter ended
September 30, 2010 compared to an operating loss of $103,030 for the same period
in 2009. The increase in revenues along with the decrease in personnel costs and
director's fees caused operating losses to decrease significantly.

The Company did not report any interest income for the quarters ended September
30, 2009 and September 30, 2010. The Company did not report any interest income
for the nine-months ended September 30, 2010 however the Company did have
interest income of $959 for the nine-months ended September 30, 2009. The
Company's interest expense for the three-months ended September 30, 2010 was
$394 compared to $44,772 for the same period ended in 2009. The Company's
interest expense for the nine-months ended September 30, 2010 was $1,148
compared to $54,261 for the nine-months ended September 30, 2009. The large
interest expense incurred in 2009 was related to an outstanding loan of
$1,000,000 that was paid off through a certificate of deposit of $1,000,000
prior to December 31, 2009.

<PAGE>



The net loss for the three months ended September 30, 2010 was $14,646 compared
to a net loss of $150,719 for the quarter ended September 30, 2009. The decrease
in net loss is primarily attributable a decrease in personnel costs. The net
loss for the nine-months ended September 30, 2010 was $77,264 compared to a net
loss of $259,130 for the nine-months September 30, 2009.

SUBSEQUENT EVENTS

There were no significant subsequent events to report since the September 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 entering into farm-out arrangements to defer the
exploration commitments on several concessions that are now scheduled to have
drilling and/or seismic programs conducted during this year.

MATERIAL COMMITMENTS

The Company currently has no material commitments.

PURCHASE OF SIGNIFICANT EQUIPMENT

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

RELATED PARTY TRANSACTIONS

During the third quarter of 2009, the Company paid $5,554 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.

During the quarter ended September 30, 2010 the Company borrowed $26,266 from
Robert Kamon's son, Robert Kamon is Secretary and Director of the Company. The
terms of the loan is 5% interest until November 27, 2010 and thereafter will
earn 12% interest per annum.

OFF-BALANCE SHEET ARRANGEMENTS

As of September 30, 2010, the Company had no off-balance sheet arrangements.

<PAGE>



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

We are a smaller 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.

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

<PAGE>



                           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 - None

                                   SIGNATURES

In  accordance  with  the requirement of the Exchange Act, the registrant caused
this  report  to  be  signed  on  its  behalf by the undersigned, thereunto duly
authorized.

                                          Australian-Canadian Oil Royalties Ltd.



Date: November 12, 2010                  /s/ MAHNAZ NOURMAND
                                        By:  Mahnaz  Nourmand,
                                             Principal Financial Officer