N@N

1. These financial measures are Non-GAAP financial measures and do not have any standardized meaning prescribed by Canadian generally accepted accounting principles("GAAP") and are therefore unlikely to be comparable to measures presented by other reporting issuers. See management's discussion and analysis available at [ www.sedar.com ] for a description of the Non-GAAP financial measures.

2010 Corporate Highlights

• Revenues totaled $6.8 million for the fourth quarter and $22.3 million for the year as compared to $3.1 million and $11.6 million respectively in 2009, reflecting a quarter-over-quarter increase of 119% and a year-over-year increase of 93%.

• Palko continued to make operational improvements, increasing our EBITDA margin as a % of revenue in the fourth quarter of 2010 to 20% ($0.06 per share) from 12%($0.04 per share) in the fourth quarter of 2009. Year over year the EBITDA margin increased to 18%($0.20 per share) in 2010 from 9%($0.13 per share) in 2009.
• Selling, general and administrative expenses as a percentage of revenue decreased from 23% to 18% year-over-year as a result of increased revenues and leverage efficiencies on our fixed cost structure.
• In December of 2010 Palko completed an upgrade to our Grande Cache injection system which decreased operational risk and has materially increased disposal capacity.
• In December Palko completed a second back up well and associated pipeline at its Midale facility which has increased capacity by approximately 50%. Additional growth at Midale was achieved through the expansion of storage and processing capacity throughout the year.
• Palko successfully tested a mobile oil treatment system during the second quarter of 2010. Based on this testing Palko constructed one system which we are currently commissioning, with additional units anticipated to be delivered in 2011.
• Effective March 1, 2010 Palko completed a single shipper, marketing and transportation agreement with Gibson, allowing our customers enhanced credit quality and enhanced pricing for marketing their oil. In addition, Palko has improved cash flow resulting from not funding significant inventory volumes from custom treating customers; these volumes are now purchased directly by Gibson.
• In October 2010, Palko leveraged our single shipper and marketing agreement with Gibson by providing a unique logistically streamlined one-stop service for the handling and marketing of oil emulsion in southeast Saskatchewan. The facility is located in Midale and includes a truck terminal for the acceptance of dry oil, custom treating for emulsions, water disposal capacity, and a direct pipeline connection to deliver oil to market.
• Also in October 2010, Palko announced the formation of a Technical Advisory Group. This group acts as an innovation forum to assess and apply leading edge treatment technologies and processes to oilfield wastes.
• Palko spent $4.4 million on property, plant and equipment, in addition to the acquisition of the remaining portion of Midale, increasing disposal capacities at various facilities and diversifying services offered to customers.
• Pursuant to a business combination on June 30, 2010 Palko acquired the remaining 50% equity interest of Palko Energy Ltd. ("Midale") for cash consideration of approximately $2.6 million and the issuance of 4.5 million common shares. Palko completed a private placement financing of $3.0 million for 3 million common shares with Gibson Energy ULC ("Gibson") to assist with the cash portion of the Midale acquisition.

Financial Overview

Revenue

Revenue for the three months and year ended December 31, 2010 was $6.8 million, a 119% increase and $22.3 million, a 93% increase versus $3.1 million and $11.5 million in the comparative periods in 2009. Western Canadian drilling showed continued momentum with 12,101 wells rig released in 2010, a 45% year-over-year increase with the fourth quarter showing 3,896 wells rig released in 2010 as compared to 2,653 in the prior comparative quarter. An increase in activity and volumes at our facilities, the inclusion of 100% ownership of the Midale facility from July 1 to December 31, 2010, and increasing crude oil prices provided for much of this revenue growth.

Operating expenses

Operating expenses for the three months and year ended December 31, 2010, were $4.0 million, a 108% increase and $13.9 million, an 83% increase compared to $1.9 million and $7.6 million in the comparative periods in 2009. The increase in operating expenses was anticipated based on our revenue increases during the comparative periods. Since a significant amount of our costs are fixed, margins increased in an era of increasing activity. The operating margin for the fourth quarter of 2010 was 41% as compared to 40% for the 2010 third quarter and 38% for the 2009 fourth quarter. For the year ended December 31, 2010 our operating margin was 38% as compared to 34% in 2009. Activity has increased which is positive, but pricing pressure still persists in some of the areas Palko operates in. We are noticing some of the pricing pressure starting to ease as activity increases. We anticipate that margins will continue to improve in 2011. The increase in margins continues to reflect the efficiencies gained as we grow our company and take advantage of the increased activity in our markets.

EBITDA and Funds from Operations

EBITDA increased 261% and 264% for the three months and year ended December 31, 2010 as compared to the previous comparable periods in 2009. Funds from operations also increased significantly period over period and year over year recognizing increases of 504% and 653% respectively. Both of these metrics are important as they enable the Company to finance a portion of our growth internally as compared to the 2009 and 2008 fiscal years where debt was used almost exclusively to finance the growth projects.

Outlook

As 2011 unfolds we continue to focus on the growth of our business. We are currently analyzing new opportunities and expansion of our current facilities to offer better service for our customers and value for our shareholders.

During 2010, Palko expanded our complement of human resources required to grow the business. As a result of the investment in human resources, wells, geological studies and regulatory work, Palko now has an extensive portfolio of new projects and organic growth opportunities in varying stages of development. Management intends on building and commissioning at least two new facilities by the end of 2011. Palko's focus for these new facilities will be in oil focused resource plays with established conventional production and unconventional development activity. One such market is Palko's primary market in the Saskatchewan Bakken where activity levels continue at a rapid pace. In Alberta, the Cardium is another market with existing production where activity levels appear set to remain high into the foreseeable future. In existing markets, Palko will service its customers through increased waste acceptance services and treating capacity while decreasing un-load times.

Activity levels in the services sector have strengthened and we expect this positive momentum to continue through the balance of the year. The Petroleum Services Association of Canada ("PSAC") has forecasted 19.9 million meters to be drilled in 2011, a 23% improvement over the 16.2 million meters drilled in 2010. Drilling activity has remained focused on horizontal wells employing multistage fracturing technology in unconventional resource plays. Palko expects that the trend towards more meters drilled will continue through the balance of 2011 which, when combined with increased drilling activity, will strengthen overall demand for treatment or disposal of spent waste fluids, crude emulsions and other services provided by Palko.

The energy industry's focus on horizontal wells, employing multistage fracturing technology in unconventional resource plays, has created demand for innovation in water supply, treatment, recovery and ultimately disposal. Palko will continue to focus on commercially attractive technologies to increase innovation and to satisfy increased demand for service in the space in which we do business. Subsequent to year end Palko engaged in the testing of an innovative water treatment technology, employing microscopic bubbles to remove solids and enhance the recovery of oil. Preliminary results have been encouraging.

About Palko Environmental Ltd.

Palko Environmental Ltd ("Palko") is a Calgary, Alberta based company, incorporated under the Business Corporations Act (Alberta), that provides hydrocarbon waste management and resource recovery solutions to the upstream and midstream oil and gas industry in western Canada.

Palko owns/operates six waste management facilities in Alberta and Saskatchewan and a new division of mobile on-site oil treatment systems. We handle hydrocarbon waste streams through-out the life cycle of conventional and unconventional oil and gas wells including drilling, fracturing, completions, production, work-overs and subsequent abandonment and reclamation of the well. Our waste management services include the treatment and the processing of hydrocarbon wastes, recovery of oil for our customers and disposal of various waste by-products post processing such as water, waste fluids and solids. In addition we offer our customers the value-added services of shipping and marketing their oil through our strategic partnership with Gibson Energy ULC ("Gibson") (Gibson holds a 39% ownership interest in Palko).

Palko is an established industry player in a growing market with numerous barriers to entry. Over the past year we have gained financial strength evident by our current balance sheet and improved financial performance. Palko is now focused on future growth through increases in activity at our facilities, investing in a multitude of accretive organic growth opportunities that we have analyzed, and leveraging off operating synergies with our strategic partner, Gibson.

Additional information about Palko Environmental Ltd. is available at [ www.sedar.com ] and on the company's website at [ www.palko.com ].

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements in this press release constitute "forward-looking" statements that involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Palko, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this document, such statements use such words as "may", "will", "intend", "should", "expect", "believe", "plan", "anticipate", "estimate", "predict", "potential", "continue", or the negative of these terms or other similar terminology.

Such statements include:

• Palko's expectation that their operating margins will continue to improve for the next two quarters;
• Palko's expectation that there will be increased demand for disposal or treatment of spent waste fluids, crude emulsion treatment and other services provided by Palko;
• Palko's expectation that they will be able to finance a portion of their projects in 2011 with EBITDA and Funds from Operations;
• Palko's expectation that they will be able to capitalize on growth opportunities and expand current facilities;
• Palko's intention to build at least two new facilities;
• that activity levels in the services sector generally and in the Cardium market specifically will remain high or increase.

These statements reflect current expectations regarding future events and operating performance and speak only as of the date of this document. These statements are based on certain assumptions, including:

• a stable or improving economy;
• increased drilling activity levels for 2011;
• drilling activity remaining focused on horizontal wells in unconventional resource plays
• stable or increasing commodity prices,;
• ability to maintain relationships and retain qualified personnel and management;
• ability to finance and construct new facilities.

Although Palko believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that these expectations will prove to be correct. There are risks which could affect Palko Environmental's future results and could cause the results to differ materially from those expressed in these forward looking statements including that:

• regulatory approvals will not be received;
• changing regulatory environment negatively impacting barriers to entry or other industry conditions;
• Palko's strategic relationship with Gibson will not be maintained;
• the impact of general economic conditions in Canada and the risk that they will deteriorate;
• industry conditions, including fluctuations in the price of oil and natural gas and the risk that they decrease;
• the impact of governmental regulation, including environmental regulation;
• stock market volatility;
• the need to obtain required approvals from regulatory authorities;
• drilling activity will not be at the level or of the nature anticipated;
• the inability to maintain and capitalize on existing business relationships or retain qualified personnel or management; and
• the uncertainty inherent in attracting capital;
• construction delays, problems or stoppages.

Statements of past performance should not be construed as an indication of future performance. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors, including those discussed above, could cause actual results to differ materially from the results discussed in the forward-looking statements. Any such forward-looking statements are expressly qualified in their entirety by this cautionary statement. Moreover, Palko Environmental does not assume responsibility for the accuracy or completeness of such forward-looking statements.

The forward-looking statements included in this Press Release are made as of the date of this Press Release and Palko Environmental undertakes no obligation to publicly update or revise forward-looking statements other than as required by applicable laws. You should not place undue reliance on forward-looking statements.