PROMISSORY NOTE
                                                              Account Officer
Principal     Loan Date     Maturity    Loan No    Call/Coll     Initials
$125,150.00   02-27-2004   04-27-2004   11012973   4(2N)/OPN        TJS

References  in the shaded  area are for  Lender's  use only and do not limit the
applicability  of this document to any  particular  loan or item. Any item above
containing ***** has been omitted due to text length limitations.

Borrower: The Beard Company (TIN: 73-0970298)  Lender: BANK OF NICHOLS HILLS
          5600 N. May Ave., Suite 320                  2644 N. W. 63rd
          Oklahoma City, OK 73112                      P.O. Box 18329 (73154)
                                                       Oklahoma City, OK 73116

Principal Amount: $125,150.00
Interest Rate: 7.000%
Date of Note: February 27,2004

PROMISE  TO PAY.  The  Beard  Company  ("Borrower")  promises  to pay to BANK OF
NICHOLS  HILLS  ("Lender"),  or order,  in lawful money of the United  States of
America,  the principal amount of One Hundred  Twenty-five  Thousand One Hundred
Fifty & 00/100 Dollars ($125,150.00) or so much as may be outstanding,  together
with  interest  at the  rate of  7.000%  per  annum  on the  unpaid  outstanding
principal balance of each advance. Interest shall be calculated from the date of
each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan In one payment of all outstanding principal
plus all accrued unpaid interest on April 27, 2004.  Unless  otherwise agreed or
required by applicable law, payments will be applied first to any accrued unpaid
interest; then to prlnclpal; and then to any unpaid collection costs. The annual
interest rate for this Note Is computed on a 365/360 basis; that is, by applying
the ratio of the annual interest rate over a year of 360 days, multiplied by the
outstanding  principal  balance,  multiplied  by the  actual  number of days the
principal  balance is outstanding.  Borrower will pay Lender at Lender's address
shown above or at such other place as Lender may designate in writing.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are  eamed  fully as of the date of the loan and will not be  subject  to refund
upon early  payment  (whether  voluntary or as a result of  default),  except as
otherwise  required by law.  Except for the foregoing,  Borrower may pay without
penalty  all or a portion  of the  amount  owed  earlier  than it is due.  Early
payments will not,  unless agreed to by Lender in writing,  relieve  Borrower of
Borrower's obligation to continue to make payments.  Rather, early payments will
reduce the principal  balance due.  Borrower  agrees not to send Lender payments
marked "paid In full",  "without  recourse",  or similar  language.  If Borrower
sends such a payment, Lender may accept it without losing any of Lender's rights
under this Note,  and Borrower will remain  obligated to pay any further  amount
owed  to  Lender.  All  written  communications   concerning  disputed  amounts,
including any check or other payment  instrument that indicates that the payment
constitutes  "payment in full" of the amount owed or that is tendered with other
conditions or limitations or as full  satisfaction  of a disputed amount must be
mailed or delivered to: BANK OF NICHOLS HILLS,  2644 N.W.  63rd,  P.O. Box 18329
(73154), Oklahoma City, OK 73116.

INTEREST  AFTER  DEFAULT.  Upon  default,  including  failure  to pay upon final
maturity,  Lender,  at its  option,  may, if  permitted  under  applicable  law,
increase the interest rate on this Note 5.000  percentage  points.  The interest
rate will not exceed the maximum rate permitted by applicable law.

DEFAULT.  Each of the following shall  constitute an event of default ("Event of
Default") under this Note:

     Payment  Default.  Borrower  fails to make any payment  when due under this
     Note.

     Other Defaults. Borrower fails to comply with or to perform any other term,
     obligation,  covenant or condition  contained in this Note or in any of the
     related  documents  or to comply with or to perform  any term,  obligation,
     covenant or condition  contained in any other agreement  between Lender and
     Borrower.

     False  Statements.  Any  warranty,  representation  or  statement  made  or
     furnished to Lender by Borrower or on Borrower's  behalf under this Note or
     the related  documents  is false or  misleading  in any  material  respect,
     either now or at the time made or furnished or becomes  false or misleading
     at any time thereafter.

     Insolvency.  The  dissolution or  termination of Borrower's  existence as a
     going business,  the insolvency of Borrower,  the appointment of a receiver
     for any part of  Borrower's  property,  any  assignment  for the benefit of
     creditors,  any  type  of  creditor  workout,  or the  commencement  of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     Creditor  or  Forfeiture   Proceedings.   Commencement  of  foreclosure  or
     forfeiture   proceedings,   whether  by  judicial  proceeding,   self-help,
     repossession  or any other  method,  by any  creditor of Borrower or by any
     governmental agency against any collateral securing the loan. This includes
     a garnishment of any of Borrower's  accounts,  including  deposit accounts,
     with Lender.  However,  this Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or  reasonableness of the
     claim which is the basis of the creditor or  forfeiture  proceeding  and if
     Borrower  gives  Lender  written  notice  of  the  creditor  or  forfeiture
     proceeding  and  deposits  with  Lender  monies  or a  surety  bond for the
     creditor or forfeiture  proceeding,  in an amount  determined by Lender, in
     its sole discretion, as being an adequate reserve or bond for the dispute.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any  Guarantor  of any of the  indebtedness  or any  Guarantor  dies  or
     becomes  incompetent,  or revokes or disputes the validity of, or liability
     under,  any guaranty of the  indebtedness  evidenced  by this Note.  In the
     event of a death, Lender, at its option, may, but shall not be required to,
     permit the  Guarantor's  estate to assume  unconditionally  the obligations
     arising  under the  guaranty in a manner  satisfactory  to Lender,  and, in
     doing so, cure any Event of  Default.

     Change In Ownership.  Any change in ownership of twenty-five  percent (25%)
     or more of the common stock of Borrower.

     Adverse Change.  A material  adverse change occurs in Borrower's  financial
     condition,  or Lender  believes the prospect of payment or  performance  of
     this Note is impaired.

     Insecurity. Lender in good faith believes itself insecure.

     Cure Provisions. If any default, other than a default in payment is curable
     and if  Borrower  has not  been  given a  notice  of a  breach  of the same
     provision of this Note within the preceding  twelve (12) months,  it may be
     cured (and no event of  default  will have  occurred)  if  Borrower,  after
     receiving  written notice from Lender  demanding cure of such default:  (1)
     cures the default  within  fifteen (15) days;  or (2) if the cure  requires
     more than fifteen (15) days, immediately initiates steps which Lender deems
     in  Lender's  sole  discretion  to be  sufficient  to cure the  default and
     thereafter  continues  and  completes all  reasonable  and necessary  steps
     sufficient to produce compliance as soon as reasonably practical.

LENDER'S  RIGHTS.  Upon default,  Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest  immediately  due, and then
Borrower will pay that amount.

ATTORNEYS' FEES;  EXPENSES.  Lender may hire or pay someone else to help collect
this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This
includes,  subject to any limits under applicable law, Lender's  attorneys' fees
and  Lender's  legal  expenses,  whether  or not there is a  lawsuit,  including
without  limitation  all  attorneys'  fees and  legal  expenses  for  bankruptcy
proceedings  (including  efforts  to  modify  or vacate  any  automatic  stay or
injunction),  and appeals.  If not prohibited by applicable  law,  Borrower also
will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.

GOVERNING  LAW.  This  Note will be  governed  by,  construed  and  enforced  in
accordance with federal law and the laws of the State of Oklahoma. This Note has
been accepted by Lender in the State of Oklahoma.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of Oklahoma County, State of Oklahoma.

DISHONORED  ITEM FEE.  Borrower  will pay a fee to Lender of $10.00 if  Borrower
makes a  payment  on  Borrower's  loan  and the  check or  other  payment  order
including any preauthorized charge with which Borrower pays is later dishonored.

RIGHT OF SETOFF.  To the extent  permitted by applicable  law, Lender reserves a
right of  setoff in all  Borrower's  accounts  with  Lender  (whether  checking,
savings,  or some other  account).  This  includes all accounts  Borrower  holds
jointly  with  someone  else and all  accounts  Borrower may open in the future.
However,  this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower  authorizes Lender, to the
extent  permitted by  applicable  law, to charge or setoff all sums owing on the
debt   against  any  and  all  such   accounts  and  at  Lender's   option,   to
administratively  freeze all such  accounts to allow Lender to protect  Lender's
charge and setoff rights provided in this paragraph.

COLLATERAL. This loan is unsecured.

LINE OF CREDIT.  This Note  evidences a straight line of credit.  Once the total
amount of principal has been advanced,  Borrower is not entitled to further loan
advances.  Advances  under this Note may be  requested  orally by Borrower or as
provided in this  paragraph.  Lender may,  but need not,  requlre  that all ora1
requests  be  confirmed  in  writing.  All  communications,   instructions,   or
directions  by  telephone  or otherwise to Lender are to be dlrected to Lender's
office shown above.  The following  persons  currently are authorized to request
advances and authorize  payments under the line of credit until Lender  receives
from Borrower,  at Lender's address shown above, written notice of revocation of
their authority: Herb Moo, Jr., P.resldentlCFO of The Beard Company; and William
M. Beard,  Chairman/CEO  of The Beard Company.  Borrower agrees to be liable for
all sums  elther:  (A)  .advanced in  accordance.  with the  instructions  of an
authorized person or (B) credited to any of Borrower's accounts with Lender. The
unpaid  pnnclpal  balance  owing on this  Note at any time may be  evidenced  by
endorsements  on this Note or by  Lender's  internal  records,  including  daily
computer print-outs.  Lender will have no obligation to advance funds under this
Note if: (A)  Borrower or any  guarantor  is in default  under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender,  including
any agreement made in connection  with the signing of this Note; (B) Borrower or
any guarantor  ceases doing business or is insolvent;  (C) any guarantor  seeks,
claims or  otherwise  attempts  to limit,  modify  or  revoke  such  guarantor's
guarantee of this Note or any other loan with  Lender;  (D) Borrower has applied
funds provided pursuant to this Note for purposes other than those authorized by
Lender; or (E) Lender in good faith believes itself insecure.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs,  personal  representatives,  successors and assigns,  and
shall inure to the benefit of Lender and its successors and assigns.

GENERAL  PROVISIONS.  Lender may delay or forgo  enforcing  any of its rights or
remedies under this Note without losing them.  Borrower and any other person who
signs,  guarantees or endorses this Note,  to the extent  allowed by law,  waive
presentment,  demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise  expressly stated in writing,  no party
who signs  this  Note,  whether  as  maker,  guarantor,  accommodation  maker or
endorser,  shall be released from liability.  All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security  interest in the collateral;  and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan  without the consent of or notice to
anyone other than the party with whom the  modification is made. The obligations
under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE,  BORROWER READ AND  UNDERSTOOD ALL THE PROVISIONS OF
THIS  NOTE.  BORROWER  AGREES TO THE TERMS OF THE  NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

THE BEARD Company

By: /s/ Herb Mee, Jr.
    Herb Mee, Jr., President/CFO of The Beard Company