REPLACEMENT
                              RENEWAL AND EXTENSION
                                 PROMISSORY NOTE



$2,785,000.00                                            Oklahoma City, Oklahoma
                                                                  March 26, 2004


     For value  received,  the  undersigned,  The  Beard  Company,  an  Oklahoma
corporation  (the "Maker"),  agrees to all of the terms of this  Promissory Note
(this  "Note") and promises to pay to the order of William M. Beard and Lu Beard
as  Trustees  of the  William  M. Beard and Lu Beard  1988  Charitable  Unitrust
(individually and collectively called the "Holder"),  at Enterprise Plaza, Suite
320, 5600 N. May,  Oklahoma City,  Oklahoma 73112, or at such other place as may
be  designated  in writing by the Holder of this Note,  the principal sum of Two
Million Seven Hundred  Eighty-Five  Thousand  Dollars  ($2,785,000.00)  plus all
interest accruing thereon. This Note will be payable as follows:

     Prior to  Default  the  unpaid  principal  balance  of this  Note will bear
     interest at the rate of ten percent (10%) (the "Applicable Rate"). Interest
     will commence to accrue on the unpaid principal balance of this Note on the
     date hereof and thereafter  until this Note is paid in full.  Interest will
     be  computed  for the actual  number of days  elapsed at a per diem  charge
     based on a year  consisting of three hundred sixty (360) days. All payments
     will  be  applied  first  to any  accrued  interest  on this  Note  and the
     remainder to the principal  balance of the Note. The outstanding  principal
     balance plus unpaid accrued interest are due and payable on April 1, 2006.

     Except as otherwise  defined herein,  all terms defined in the Restated and
Amended  Letter Loan  Agreement of even date herewith  between the Maker and the
Holder (the "Loan  Agreement")  will have the same meanings as therein,  and the
Holder  recognizes  that it is subject to all of the provisions set forth in the
Amendment to Restated and Amended Letter Loan Agreement dated June 25, 2004 (the
"Amended Loan  Agreement).  Both  principal and interest  owing  pursuant to the
terms of this Note are payable in the lawful  currency  of the United  States of
America and in immediately  available funds. All payments made on this Note will
be applied to this Note when received by the Holder  hereof in collected  funds.
Any sum not paid when due will bear interest at the rate equal to the Applicable
Rate  plus  five  percent  (5.0%)  and  will be paid at the  time  of,  and as a
condition precedent to, the curing of any Event of Default. During the existence
of any Event of Default,  the Holder of this Note may apply payments received on
any  amount  due  hereunder  or  under  the  terms of any  instrument  hereafter
evidencing or securing said indebtedness as the Holder may determine.

     The Maker agrees that if, and as often as, this Note is placed in the hands
of an attorney for collection or to defend or enforce any of the Holder's rights
hereunder,  the Maker will pay to the Holder all reasonable  attorney's fees and
all expenses incurred by the Holder in connection therewith.

     THIS NOTE IS GIVEN BY THE MAKER AND  ACCEPTED  BY THE HOLDER  PURSUANT TO A
LENDING  TRANSACTION  CONTRACTED,  CONSUMMATED,  AND TO BE PERFORMED IN OKLAHOMA
CITY, OKLAHOMA COUNTY,  OKLAHOMA,  AND THIS NOTE SHALL BE CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF  OKLAHOMA.  In the event of any Event of  Default,  the
Holder may  request,  and the Maker  agrees to furnish to the Holder,  agreeable
collateral and such security  agreements as the Maker may reasonably  require to
secure the indebtedness.

     This Note is issued  subject  to the  terms of the Loan  Agreement  and the
Amended Loan Agreement (collectively,  the "Loan Agreements").  On the breach of
any  provision  of this Note,  or any  provision of the Loan  Agreements  at the
option of the Holder, the entire unpaid indebtedness evidenced by this Note will
become due,  payable and collectible then or thereafter as the Holder may elect,
regardless of the date of maturity of this Note.  Notice of the exercise of such
option is hereby expressly waived. Failure by the Holder to exercise such option
will not  constitute  a waiver of the right to exercise the same in the event of
any subsequent default.

     The  failure of the Holder to exercise  any of the  remedies or options set
forth in this Note,  or in any  instrument  securing  payment  hereof,  upon the
occurrence  of one or more Events of Default,  shall not  constitute a waiver of
the right to exercise  the same or any other  remedy at any  subsequent  time in
respect to the same or any other Event of Default.  The acceptance by the Holder
of any  payment  which is less than the total of all  amounts due and payable at
the time of such payment shall not  constitute a waiver of the right to exercise
any of the foregoing remedies or options at that time or any subsequent time, or
nullify any prior exercise of such remedy or option, without the express consent
of the Holder.

     Time is of the essence of each obligation of the Maker hereunder.

     The makers, endorsers,  sureties,  guarantors and all other persons who may
become liable for all or any part of this obligation severally waive presentment
for payment,  protest, demand and notice of nonpayment.  Said parties consent to
any extension of time (whether one or more) of payment hereof,  the modification
(whether one or more) of payment hereof,  release or substitution of all or part
of the  security  for the  payment  hereof or  release  of any party  liable for
payment of this  obligation.  Any such  extension or release may be made without
notice  to any  such  party  and  without  discharging  such  party's  liability
hereunder.

     The Maker has the right to prepay this Note in whole or in part at any time
and from time to time without premium or penalty,  but with accrued  interest to
the date of the prepayment on the amount prepaid.

     The Maker waives presentment for payment, protest and notice of nonpayment.

     IN WITNESS WHEREOF, the Maker has executed this instrument effective on the
date first above written.


ATTEST:                                     THE BEARD COMPANY

/s/Rebecca G. Witcher                       /s/Herb Mee, Jr.
---------------------------                 -----------------------------------
Rebecca G. Witcher, Secretary               Herb Mee, Jr., President