NOTE ASSUMPTION AGREEMENT AND RELEASE

     This Note Assumption Agreement and Release (this "Agreement") is made as of
July 22, 2005 (the "Effective  Date"),  by and among William Beard and Lu Beard,
as  trustees  for The  William M. Beard and Lu Beard  1988  Charitable  Unitrust
("Unitrust"),  The Beard  Company  ("Company"),  and  Boatright  Family,  L.L.C.
("Boatright").

                                    RECITALS

     Whereas, the Company has previously executed and delivered to Unitrust that
certain 10%  Participating  Note, dated May 21, 2004, in the original  principal
amount of  $500,000.00  (the "Company  Unitrust  Note"),  upon which,  as of the
Effective  Date, the unpaid  principal  balance is  $384,101.80  and all accrued
interest has been paid in full; and

     Whereas,  Unitrust has previously  executed and delivered to Boatright that
certain  Promissory Note (the "Unitrust  Boatright Note") dated May 21, 2004, in
the original principal amount of $500,000, upon which, as of the Effective Date,
the unpaid  principal  balance is $388,817.92 and all accrued  interest has been
paid in full.

     Whereas, the Company has previously executed and delivered, for the benefit
of McElmo Dome Nominee,  LLC as nominee (in such  capacity,  the  "Nominee") for
Boatright and others, two certain deeds of trust  (collectively,  the "2004 Deed
of  Trust"),  each dated May 21, 2004 and titled  Deed of Trust,  Assignment  of
Production,  Security Agreement and Financing Statement,  one such deed of trust
to the public trustee of Montezuma  County,  Colorado and one such deed of trust
to the public trustee of Dolores County,  Colorado,  covering certain  undivided
interests in oil, gas, and mineral  leases (the  "Collateral"),  each given,  in
part, in consideration  of, and to secure,  the loan made by the Unitrust to the
Company evidenced by the Company Unitrust Note.

     Now,  therefore,  in  consideration of the foregoing  premises,  the mutual
covenants  and  agreements  contained  in this  Agreement,  and  other  good and
valuable   considerations,   the  receipt  and  adequacy  of  which  are  hereby
acknowledged, Unitrust, Company, and Boatright agree as follows:

     1. Recitals.  Each of the parties  acknowledge  and confirm the accuracy of
the recitals set forth above.

     2.  Boatright  Representations  and  Warranties.  Boatright  represents and
warrants that  Boatright is the sole holder and owner of the Unitrust  Boatright
Note, free of all claims and encumbrances.

     3.  Unitrust  Representations  and  Warranties.   Unitrust  represents  and
warrants  that  Boatright  is the sole holder and owner of the Company  Unitrust
Note, free of all claims and encumbrances.

     4. Assumption of Obligations and Cash Payment.  The Company hereby assumes,
covenants,  promises  and agrees (a) to pay the Unitrust  Boatright  Note at the
time,  and in the manner in all  respects  as therein  provided,  as same may be
modified or amended  from time to time,  and (b) to perform  each and all of the
covenants,  agreements  and  obligations  of the Unitrust  Boatright  Note to be
performed  by the  maker  thereunder,  at the  time,  and in the  manner  in all
respects  as  therein  provided,  as  same  may  be  modified  or  amended  from
time-to-time.  The  Company  further  acknowledges  receipt  of cash paid by the
Unitrust to the Company in the amount of $4,716.12, as additional  consideration
for the assumption of the Unitrust Boatright Note.

     5.  Unitrust  Release of the Company.  In  consideration  of the  Company's
assumption of the  obligations  described in paragraph 4 above,  Unitrust hereby
acknowledges  full and final payment and  satisfaction  of the Company  Unitrust
Note, and hereby  releases and discharges any and all claims or causes of action
it may have against the Company arising directly or indirectly under the Company
Unitrust Note, or resulting in any way from the indebtedness  evidenced  thereby
and the transactions under which the Company Unitrust Note was issued.

     6. 2004 Deed of Trust Remains Effective. Notwithstanding anything herein to
the contrary,  this Agreement shall not affect or impair any  representation  in
regard to and/or  warranty of title  heretofore  made by the Company in the 2004
Deed of Trust,  all of which  shall  remain in force and inure to the benefit of
Nominee, its successors and assigns. The Collateral shall remain in all respects
subject  to the lien,  charge  or  encumbrance  of the 2004  Deed of Trust,  and
nothing herein  contained and nothing done pursuant  hereto,  shall affect or be
construed to affect the lien, charge or encumbrance of, or warranty of title in,
or conveyance  affected by the 2004 Deed of Trust, or the priority  thereof over
other liens,  charges,  encumbrances or  conveyances,  nor shall anything herein
contained or done in pursuance hereof affect or be construed to affect any other
security or  instrument  held by  Boatright  as security  for or evidence of the
Unitrust Boatright Note.

     7. Boatright Consent and Release of Unitrust.  Boatright hereby consents to
the  assumption  by  the  Company  of  the  Unitrust   Boatright  Note,  and  in
consideration  of such  assumption,  hereby  releases and discharges any and all
claims or causes of action it may have  against  Unitrust,  but not the Company,
arising directly or indirectly  under the Unitrust  Boatright Note, or resulting
in any way from the indebtedness  evidenced  thereby and the transactions  under
which the Unitrust Boatright Note was issued. Without limiting the generality of
the foregoing,  the Boatright  acknowledges that Company is the sole obligor for
payment and  performance of the Unitrust  Boatright Note and for  performance of
the conditions of the 2004 Deed of Trust.

     8.  Successors.  All  of  the  grants,  covenants,  terms,  conditions  and
agreements  hereof  shall be binding upon and inure to the benefit of all of the
heirs,  executors,  administrators,  assigns and  successors  in interest of the
parties hereto.

     9. Entire Agreement. Neither this Agreement nor any provision hereof may be
changed, altered, waived, amended,  discharged or terminated orally, but only by
an instrument reduced to writing, signed by all parties hereto.

     The undersigned  have executed this Note  Assumption  Agreement and Release
the as of the Effective Date.

"COMPANY"                              THE BEARD COMPANY an Oklahoma corporation

                                       By   /s/ Herb Mee, Jr.
                                            Herb Mee, Jr., President

"UNITRUST"                             THE WILLIAM M. BEARD AND LU BEARD 1988
                                         CHARITABLE UNITRUST

                                       By   /s/ William M. Beard
                                            William Beard, Trustee


                                       By  /s/ Lu Beard
                                           Lu Beard, Trustee

"BOATRIGHT"                            BOATRIGHT FAMILY L.L.C., an Oklahoma
                                         limited liability company

                                       By  /s/ Peter Boatright
                                           Peter Boatright, Manager