Al0.11Ga0.89N/GaN samples are grown by plasma-assisted molecular beam epitaxy method on (111) silicon substrates. High purity gallium (7N) and aluminum (6N5) were used to grow Al0.11Ga0.89N, GaN, and AlN, respectively. The surface morphology, structural and optical properties of the sample has been investigated by scanning electron microscope (SEM), and high-resolution X-ray diffraction (HR-XRD), respectively. HR-XRD measurement showed that the sample has a typical diffraction pattern of hexagonal Al0.11Ga0.89N/GaN heterostructures. Ni/Ag bilayers are deposited on Al0.11Ga0.89N as the Schottky contacts. The effect of annealing in oxygen ambient on the electrical properties of Ni/Ag/Al0.11Ga0.89N is studied by current-voltage measurement. The annealing at a temperature of 700 degrees C for 10 min results in an increase in the ideality factor from 1.033 to 1.042 and an increase in the Schottky barrier height from 0.708 to 0.811eV. Furthermore, the annealing in oxygen ambient also leads to an increase in the surface roughness of the contacts from 0.0098 to 0.1360 mu m which is in agreement with the SEM results.