Gibson Energy Inc. Enters Into An Arrangement Agreement To Acquire Palko Environmental Ltd.

All financial figures are in Canadian dollars unless noted otherwise

CALGARY, Oct. 17, 2011 /PRNewswire/ - Gibson Energy Inc. ("Gibson"), TSX: GEI, and Palko Environmental Ltd. ("Palko"), TSX: PLK, are pleased to announce that they have entered into an agreement providing for the acquisition by Gibson of all of the issued and outstanding common shares of Palko ("Palko Shares") not already owned, directly or indirectly, by Gibson (the "Transaction"). Under the terms of the Transaction, shareholders of Palko may elect to receive either: (i) 0.1717 of a common share of Gibson ("Gibson Share") for each Palko Share; or (ii) $3.05 cash for each Palko Share; or (iii) a combination thereof. The total cost to Gibson is approximately $62.7 million, including the assumption of estimated net debt of approximately $15.95 million.  When combined with Gibson's investments in Palko to date pursuant to which Gibson has acquired approximately 39% of the outstanding Palko Shares, Gibson is paying an effective price of approximately $2.26 per Palko Share in order to acquire 100% of Palko.

The Transaction will expand Gibson's Canadian custom terminal operations to include water disposal services and oilfield waste management. "The acquisition of the remaining interest of Palko is a key step in forming this platform to meet the ever increasing water disposal services and oilfield waste management needs of the oil and gas industry in North America" said Stew Hanlon, President and Chief Executive Officer of Gibson.  "Palko represents a strategic acquisition for Gibson. Combined with our recent investment in the Plato Pipeline, Treating and Disposal facility ("Plato") and development plans for our Rimbey Custom Terminal ("Rimbey"), it creates a service offering in western Canada that will make Gibson a significant player in this space."  The combined platform, including Palko (100% interest), Plato and Rimbey, represents an investment by Gibson of $82 million for a total estimated EBITDA contribution of $16 million per year when fully operational.  A detailed description and location map of these assets are in the Appendix of this press release.  "This expansion of Gibson's custom terminal service offering across western Canada will create additional benefits in our trucking and marketing businesses due to the integrated nature of our business model." said Mr. Hanlon.

Jay Simmons, Chairman and CEO of Palko commented: "This transaction recognizes the tremendous underlying value that has been created by the exceptional team we have assembled at Palko and provides shareholders with an attractive premium to recent trading values. We have grown to know Gibson well over the past few years: they are a world class organization that has been a wonderful partner in Palko's success. We are delighted to see the Palko team be provided the opportunity to accelerate its growth with Gibson."

The Transaction is to be completed through an arrangement pursuant to the Business Corporations Act ( Alberta) and is expected to be completed by the middle of December 2011. Completion of the Transaction is subject to approval by Palko shareholders, court approval and regulatory approvals. The Board of Directors of Palko has unanimously determined, with the nominees of Gibson abstaining, to recommend that Palko shareholders vote their Palko Shares in favour of the Transaction. Certain shareholders of Palko, collectively holding or controlling approximately 42.9% of the Palko Shares (81.8% of the Palko Shares when combined with the Palko Shares already owned by Gibson), have entered into agreements with Gibson whereby they have irrevocably agreed to vote their Palko Shares in favour of the Transaction.

The terms of the Transaction prohibit Palko from soliciting or initiating any discussion regarding any other business combination or sale of material assets, includes provisions for Gibson to match competing, unsolicited proposals and, subject to certain conditions, provides for a $3.0 million break fee payable by Palko to Gibson.

FirstEnergy Capital Corp. is acting as financial advisor to Palko with respect to the Transaction and has advised the Board of Directors of Palko that it is of the opinion, as of the date hereof and subject to review of the final documentation, that the consideration to be received by the Palko shareholders pursuant to the Transaction is fair, from a financial point of view, to the Palko shareholders (other than Gibson and its affiliates).