September 30, 2001

                                     AMENDED
                              LETTER LOAN AGREEMENT


The Beard Company
5600 N. May Avenue, Suite 320
Oklahoma City, Oklahoma 73112

Gentlemen:

This Amended Letter Loan Agreement supersedes the previous Amended Letter Loan
Agreement between the parties hereto dated June 30, 2001.

This Amended Letter Loan Agreement sets forth the terms and conditions under
which we have agreed to extend a revolving loan to you in the principal amount
of $2,250,000.00 (the "Loan").

1.    LENDER:        The William M. Beard and Lu Beard
                     1988 Charitable Unitrust (the "Unitrust").

2.    BORROWER:      The Beard Company.

3.    AMOUNT:        Such amounts as the Borrower may request from time to
                     time up to $2,250,000.00.  The Loan shall be evidenced
                     by a promissory note in the amount of $2,250,000.00 dated
                     as of today (the "Note").  The Borrower shall be permitted
                     to obtain advances, make prepayments, and obtain
                     additional advances, up to the amount of the Note.

4.    INTEREST RATE: A fixed rate of 10.00%.

5.    REPAYMENT:     The outstanding principal balance (the "Indebtedness") plus
                     unpaid accrued interest shall be due and payable on June
                     30, 2003.

6.    COLLATERAL:    A.  Until the Indebtedness has been paid in full, the
                     Borrower agrees that it will not create, grant, assume or
                     suffer to exist any lien, mortgage or encumbrance (a
                     "Lien") on its working and overriding royalty interests
                     in the McElmo Dome Unit in Montezuma and Dolores Counties
                     of Colorado ("Interests").  The Borrower will not sell,
                     transfer, convey or otherwise dispose of any of the
                     Interests, whether pursuant to a single transaction or a
                     series of transactions.

                     B.  At any time while there is Indebtedness outstanding
                     under the Note, the Trustees of the Unitrust may request,
                     and the Borrower agrees to grant to the Unitrust, a Lien on
                     its Interests, and in such event the Borrower will
                     immediately furnish such Assignments, Transfer Orders,
                     Security Agreements or other documents as the Trustees
                     may require in order to secure the Indebtedness.

7.     COVENANT:     Until the Indebtedness has been paid in full, the
                     Borrower will not sell, transfer, convey or otherwise
                     dispose of, all or a substantial portion of its assets now
                     owned or hereafter acquired, whether pursuant to a single
                     transaction or a series of transactions, and the
                     Borrower will not merge or consolidate with any person
                     or entity or permit any such merger or consolidation
                     with the Borrower.  This paragraph specifically excludes
                     asset sales incurred in the normal course of business.

8.     EVENTS OF
       DEFAULT:      If any of the following conditions or events ("Events of
                     Default") shall occur and be continuing:

                     A.  Failure of the Borrower to pay when due any amounts,
                         including principal or interest on the Note (whether at
                         the stated maturity, upon acceleration or otherwise).

                     B.  Any Event of Default as specified in the Note

                     C.  Any default or breach in the performance of any
                         covenant, obligation, representation, warranty or
                         provision contained in this Letter Loan Agreement
                         or in the Note or in any other note or obligation
                         of Borrower to the Unitrust.

                     D.  The Borrower shall: (i) apply for or consent to the
                         appointment of a custodian, receiver, trustee or
                         liquidator of the Borrower or any of its properties,
                         (ii) admit in writing the inability to pay, or
                         generally fail to pay, its debts when they come due,
                         (iii) make a general assignment for the benefit of
                         creditors, (iv) commence any proceeding relating to
                         the bankruptcy, reorganization, liquidation,
                         receivership, conservatorship, insolvency, readjustment
                         of debt, dissolution or liquidation of the Borrower,
                         or if corporate action should be taken by the Borrower
                         for the purpose of effecting any of the foregoing, (v)
                         suffer any such appointment or commencement of a
                         proceeding as described in clause (i) or (iv) of this
                         paragraph, which appointment or proceeding is not
                         terminated or discharged within 60 days, or (vi)
                         become insolvent.

         THEN upon the occurrence of any Event of Default described in the
         foregoing paragraphs the unpaid principal amount of and accrued
         interest on the Loan shall automatically become immediately due and
         payable, without presentment, demand, protest or other requirements of
         any kind, all of which are hereby expressly waived by Borrower.

If the foregoing terms and conditions are acceptable to you, please acknowledge
your agreement by signing below and returning one copy of this Letter Loan
Agreement to us.

Sincerely,

LENDER:
THE WILLIAM M. BEARD AND LU BEARD
1988 CHARITABLE UNITRUST

WILLAIM M. BEARD                            LU BEARD
William M. Beard, Trustee                   Lu Beard, Trustee

Accepted effective this 30th day of September, 2001.

BORROWER:
THE BEARD COMPANY

HERB MEE, JR.
Herb Mee, Jr., President