SUBORDINATION AND NOMINEE AGREEMENT


     This Subordination and Nominee Agreement (this "Nominee Agreement") is made
as of the 21st day of May,  2004,  by and  between  The  William M. Beard and Lu
Beard 1988  Charitable  Unitrust  (the  "Unitrust"),  Boatright  Family,  L.L.C.
("Boatright"),  and  McElmo  Dome  Nominee,  LLC,  a limited  liability  company
("Nominee").

     Whereas,  The Beard Company (the  "Company")  has executed and delivered to
William  M.  Beard  and Lu Beard,  as  Trustees  of the  Unitrust  that  certain
Promissory  Note  dated  March  26,  2004 in the  original  principal  amount of
$2,800,000 (the "Unitrust Company Note"),  evidencing a renewal and extension of
indebtedness  previously evidenced by that certain Promissory Note dated October
3, 2002 in the original principal amount of $3,000,000,  executed by the Company
and payable to Unitrust (the "Prior Unitrust Note"); and

     Whereas,  Unitrust,  Boatright,  and certain other parties have  previously
entered into a Subordination  and Nominee Agreement dated February 21, 2003 (the
"2003 Nominee Agreement") under which the Nominee has agreed to act as agent and
nominee on behalf of  Unitrust,  Boatright,  and such other  parties  under that
certain  Deed of  Trust,  Assignment  of  Production,  Security  Agreement,  and
Financing  Statement,  dated as of February 21, 2003 (the "2003 Deed of Trust"),
executed by the Company for the benefit of Nominee,  covering certain properties
owned by the  Company  and  located  in  Montezuma  County and  Dolores  County,
Colorado  (collectively,  the  "Collateral")  and securing  payment of the Prior
Unitrust Note and other  indebtedness  described in the 2003 Nominee  Agreement;
and

     Whereas, all indebtedness secured by the 2003 Deed of Trust, other than the
indebtedness  currently evidenced by the Unitrust Company Note, has been paid in
full; and

     Whereas,   contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  Boatright has made a loan to Unitrust in the amount of $500,000, and
in connection  therewith the Unitrust has executed and delivered its  Promissory
Note in such  amount  dated  as of  May 21,  2004 and (the  "Unitrust  Boatright
Note"); and

     Whereas,   contemporaneously  with  the  execution  and  delivery  of  this
Agreement,  and pursuant to a $1,200,000 Private Placement  Memorandum dated May
13, 2004,  Unitrust has used the proceeds of the Unitrust Boatright Note to make
a loan to the Company in the amount of $500,000; and

     Whereas,  to secure payment of the loans evidenced by the Unitrust  Company
Note and the Unitrust Boatright Note (collectively, the "Notes") the Company has
executed and delivered  that certain Deed of Trust,  Assignment  of  Production,
Security  Agreement,  and Financing  Statement,  dated as  of May 21, 2004, (the
"2004 Deed of Trust"),  covering the Collateral,  for the benefit of the Nominee
under the terms of this Agreement; and

     Whereas,  as a  condition  of making  the loan to the  Unitrust,  Boatright
requires  that,  with  respect to the proceeds of the  Collateral,  Boatright be
entitled to first priority to the extent of the principal  indebtedness  held by
the  Boatright,  and interest  thereon,  and that the  Unitrust's  priority with
respect to  proceeds  of the  Collateral  be  subordinated  to the  priority  of
Boatright; and

     Whereas,  the Unitrust and Boatright desire to enter into this Agreement to
provide for the orderly  enforcement  of the rights of  Unitrust  and  Boatright
(collectively,  the  "Noteholders")  in the lien  (the  "Lien")  created  in the
Collateral  under the 2004 Deed of Trust and to set forth the  priority as among
the  Noteholders  of  all  proceeds  from  the   foreclosure,   deed-in-lieu  of
foreclosure, or other sale or disposition of the Collateral or the rights of the
Nominee under the 2004 Deed of Trust, or of any other recovery resulting from or
under the 2004 Deed of Trust ("Proceeds").

     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 and Boatright  hereby  designate and appoint  Nominee as
their  agent to act on behalf  of all  Noteholders  in  holding  the  beneficial
interest  granted  under the 2004 Deed of Trust,  and in  enforcing  any and all
rights of the beneficiary  under the 2004 Deed of Trust as provided herein,  and
Nominee hereby accepts such  designation and appointment and agrees to hold such
interest and act with respect to such interest in accordance  with the terms and
conditions of this Agreement.

     For the considerations stated above, the Unitrust,  Boatright,  and Nominee
hereby further agree as follows:

     1.  Nominee.  Nominee  shall act as the  Noteholders'  agent and shall hold
title  as  nominee  to the  Lien  and  the  Collateral  for the  benefit  of all
Noteholders.

     2. Enforcement of Deed of Trust. Nominee shall not transfer,  sell, pledge,
hypothecate,  encumber,  or otherwise  exercise  any incident of ownership  with
respect to the Lien or the Collateral held by it as nominee, except as follows:

          a. At all times  prior to  payment in full of the  Unitrust  Boatright
     Note,  Nominee  shall execute and deliver such  instruments  and shall take
     such actions or refrain  from taking such actions as Boatright  may require
     for purposes of enforcing the rights of the Noteholders  under the Deeds of
     Trust.

          b. At all times  following  payment in full of the Unitrust  Boatright
     Note,  but prior to payment in full of the  Unitrust  Note,  Nominee  shall
     execute and deliver such instruments and shall take such actions or refrain
     from  taking such  actions as the  Unitrust  may  require  for  purposes of
     enforcing the rights of the Noteholders under the Deeds of Trust.

     3.  Disposition  of  Collateral.  All  Proceeds  shall  be  applied  in the
following order:

          a. First, to the expenses  incurred in enforcement of the 2004 Deed of
     Trust, the obligations secured thereby, and collection of such obligations;

          b. Second,  to  Boatright to the extent  necessary to pay the Unitrust
     Boatright Note, principal and interest;

          c. Third, to the Unitrust to the extent  necessary to pay the Unitrust
     Company Note, principal and interest; and

          d. Fourth, as required by law and by the 2004 Deed of Trust.

     4.  Notice  to  Noteholders.  The  Nominee  may,  at any time,  notify  any
Noteholder of the status of the obligations secured by the Deed of Trust and the
enforcement thereof, including any notice or instruction received by the Nominee
by any Noteholder.

     5. Binding  Effect.  This  Agreement  shall be binding upon the  respective
successors and assigns of the parties hereto.

     6.  Termination.  This Agreement may not be terminated  without the written
consent of the  Noteholders;  provided,  that  following  payment in full of the
Unitrust Boatright Note, no such consent shall be required of Boatright.  In the
event of  termination,  Nominee  agrees to take such  action  and  execute  such
documents as the  Noteholders  shall request to cause the Lien or the Collateral
to be conveyed to the Noteholders, or as otherwise directed by the Noteholders.

     7. Governing  Law. The  provisions of this Agreement  shall be construed in
accordance with the laws of the State of Oklahoma.

     8.  Counterparts.   This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of  which  shall be  deemed  as  original,  but all of which
together shall constitute one and the same agreement.

     9.  Subordination  of 2003 Deed of Trust.  It is the intent of the  parties
that the 2003 Deed of Trust, the liens created  thereunder,  and all of Nominees
rights thereunder, be renewed and extended and incorporated within the 2004 Deed
of Trust. To the extent, if any, that the 2003 Deed of Trust remains  separately
enforceable,  the 2003 Deed of Trust is and  shall  be,  at all  times  prior to
payment in full of the Unitrust Boatright Note,  subordinate and inferior to the
2004 Deed of Trust.

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


                              By   /s/ William Beard
                                   William Beard, Trustee


"NOMINEE"                     MCELMO DOME NOMINEE, LLC, an Oklahoma limited
                              liability company


                              By   /s/ William Beard
                                   William Beard, Member

                              By:       BOATRIGHT FAMILY L.L.C., Member


                                       By  /s/ Peter Boatright
                                           Peter Boatright, Manager

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


                              By   /s/ Peter Boatright
                                   Peter Boatright, Manager


     ACKNOWLEDGED by The Beard Company this 21st day of May, 2004.


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


STATE OF OKLAHOMA       )
                        )  SS.
COUNTY OF OKLAHOMA      )

     The foregoing  instrument was acknowledged  before me this 21st day of May,
2004,  by  William  Beard,  Trustee  of The  William  M. Beard and Lu Beard 1988
Charitable Unitrust.


My Commission Expires:          /s/ Linda Shrum
10/30/06                        Notary Public, State of Oklahoma
                                Commission No.  02017703
(Seal)



STATE OF OKLAHOMA      )
                       )  SS.
COUNTY OF OKLAHOMA     )

     The foregoing  instrument was acknowledged  before me this 21st day of May,
2004, by William Beard,  Member of McElmo Dome Nominee LLC, an Oklahoma  limited
liability company, on behalf of the limited liability company.


My Commission Expires:          /s/ Linda Shrum
10/30/06                        Notary Public, State of Oklahoma
                                Commission No.  02017703
(Seal)


STATE OF OKLAHOMA      )
                       )  SS.
COUNTY OF OKLAHOMA     )

     The foregoing  instrument was acknowledged  before me this 21st day of May,
2004, by Peter Boatright,  as Manager of BOATRIGHT  FAMILY L.L.C.,  as member of
McElmo Dome Nominee LLC, an Oklahoma limited liability company, on behalf of the
limited liability company.

My Commission Expires:          /s/ Linda Shrum
10/30/06                        Notary Public, State of Oklahoma
                                Commission No.  02017703
(Seal)



STATE OF OKLAHOMA      )
                       )  SS.
COUNTY OF OKLAHOMA     )

     The foregoing  instrument was acknowledged  before me this 21st day of May,
2004,  by Peter  Boatright,  Manager of  Boatright  Family  L.L.C.,  an Oklahoma
limited liability company, on behalf of the limited liability company.


My Commission Expires:          /s/ Linda Shrum
10/30/06                        Notary Public, State of Oklahoma
                                Commission No.  02017703
(Seal)


STATE OF OKLAHOMA     )
                      )  SS.
COUNTY OF OKLAHOMA    )

     The foregoing  instrument was acknowledged  before me this 21st day of May,
2003, by Herb Mee, Jr., President of The Beard Company, an Oklahoma corporation,
on behalf of the corporation.


My Commission Expires:          /s/ Linda Shrum
10/30/06                        Notary Public, State of Oklahoma
                                Commission No.  02017703
(Seal)