Document:

CIBOLA CORPORATION

                           Financial Statements
                     December 31, 2004, 2003 and 2002

         (Information with respect to 2003 and 2002 is unaudited)

                               CIBOLA CORPORATION

                                TABLE OF CONTENTS

INDEPENDENT AUDITORS' REPORT..................................................1

FINANCIAL STATEMENTS - Information with respect to 2003 and 2002 is unaudited

     Balance Sheets
        December 31, 2004 and 2003............................................2

     Statements of Earnings
        Years Ended December 31, 2004, 2003 and 2002..........................3

     Statements of Stockholders' Equity
        Years Ended December 31, 2004, 2003 and 2002..........................4

     Statements of Cash Flows
        Years Ended December 31, 2004, 2003 and 2002..........................5

     Notes to the Financial Statements........................................6

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Cibola Corporation:

We have audited the accompanying balance sheet of Cibola Corporation as of
December 31, 2004, and the related statements of earnings, stockholders' equity
and cash flows for the year then ended. These financial statements are the
responsibility of Cibola's management. Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cibola Corporation as of
December 31, 2004, and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.

The accompanying balance sheet of Cibola Corporation as of December 31, 2003 and
the related statements of earnings, stockholders' equity and cash flows for the
years ended December 31, 2003 and 2002 were not audited by us and, accordingly,
we do not express an opinion on them.

                                          COLE & REED P.C.

Oklahoma City, Oklahoma
April 11, 2006

<PAGE>

<TABLE>
                                           Cibola Corporation
                                             Balance Sheets
                                       December 31, 2004 and 2003
<CAPTION>
                                                                                           (unaudited)
                                                                               2004           2003
                                                                               ----           ----
<S>                                                                   <C>               <C>
Assets
Current assets:
  Cash and cash equivalents                                           $        5,470    $       18,948
  Accounts receivable                                                        635,178           667,185
  Accrued interest                                                            27,585            25,037
  Notes receivable                                                            91,544           103,464
  Deposits                                                                        --           729,600
  Other                                                                       16,374            41,095
                                                                      --------------    --------------
    Total current assets                                                     776,151         1,585,329
                                                                      --------------    --------------
Restricted assets:
  Cash and cash equlvalents                                                3,742,603         2,726,356
  Investment securities                                                   11,912,417        11,656,973
  Certificates of deposit                                                         --           122,000
  Accrued Interest                                                           478,052           134,762
  Notes receivable                                                         7,184,203         3,758,202
                                                                      --------------    --------------
    Total restricted assets                                               23,317,275        18,398,293
                                                                      --------------    --------------

      Total assets                                                    $   24,093,426        19,983,622
                                                                      ==============    ==============

Liabilities and stockholders' equity
Current liabilities:
   Accounts payable                                                   $      371,494           371,494
   Deferred Income taxes                                                     109,000            83,000
                                                                      --------------    --------------
      Total current liabilities                                              480,494           454,494
                                                                      --------------    --------------
Stockholders' equity:
   Preferred stock, $1,000 par, 16,200 shares authorized, issued and       2,127,929         2,127,929
    outstanding
   Common stock, $0.01 par, 180,000 shares authorized, issued and              1,800             1,800
    outstanding
   Contributed capital                                                     1,474,200         1,474,200
   Retained enarnings                                                     20,408,712        16,596,141
   Accumulated other comprehansive income                                  1,038,851           767,618
   Note receivable - common stock                                         (1,438,560)       (1,438,560)
                                                                      --------------    --------------
       Total stockholders' equity                                         23,612,932        19,529,128
                                                                      --------------    --------------

          Total liabilities and stockholders' equity                  $   24,093,426        19,983,622
                                                                      ==============    ==============
</TABLE>

See accompanying notes to the financial statements

<TABLE>
                                    Cibola Corporation
                                  Statement of Earnings
                       Years Ended December 31, 2004, 2003 and 2002
<CAPTION>
                                                               (unaudited)   (unaudited)
                                                 2004            2003           2002
                                            --------------------------------------------
<S>                                        <C>                 <C>            <C>
Natural gas marketing sales                $   7,261,830       6,887,241      6,561,718
Cost of natural gas sold                       4,410,748       4,398,696      4,405,485
                                           -------------   -------------  -------------
     Gross margin                              2,851,082       2,488,545      2,156,233

Operating expenses
    General and administrative expenses           30,275          58,191         29,344
                                           -------------   -------------  -------------

              Operating Income                 2,820,807       2,430,354      2,126,889

Investment Income (loss), net                  1,462,659         564,894     (1,140,047)
Other expense                                    (62,164)             --             --
                                           -------------   -------------  -------------

              Earnings before income tax       4,221,302       2,995,248        986,842
Income tax expense                               408,731         356,188        241,432
                                           -------------   -------------  -------------

                Net earnings               $   3,812,571       2,639,060        745,410
                                           =============   =============  =============
</TABLE>

See accompanying notes to the financial statements

<TABLE>
                                                         Cibola Corporation
                                                 Statements of Stockholders' Equity
                                            Years Ended December 31, 2004, 2003 and 2002
<CAPTION>

                                      Number of Shares
                                        Outstanding                                             Accumulated   Note
                                      -----------------                                            Other     Receivable     Total
                                       Preferred Common  Preferred Common Contributed Retained Comprehensive  Common   Stockholders'
                                          Stock  Stock     Stock    Stock  Earnings  Earnings  Income (Loss)   Stock        Equity
                                          ------ -------  ---------- ----- --------- ---------- ----------- ----------    ---------
<S>                                       <C>    <C>     <C>        <C>   <C>       <C>        <C>         <C>           <C>
Balance as of December 31, 2001                         |
 (unaudited)                              16,200 180,000| $2,127,929 1,800 1,474,200 13,211,671 (1,611,226) (1,438,560)   13,765,814
                                                        |
Comprehensive income (unaudited):                       |
 Net earnings                                 --      --|         --    --        --    745,410         --          --       745,410
 Other comprehensive income, net of tax:                |
   Net unrealized gains on investment         --      --|         --    --        --         --    377,776          --       377,776
    securitiesarising during the year                   |
    net of reclassification adjustment                  |
    for gains the year not of                           |
    reclassification adjustment for                     |
    gains included in net earnings                      |
                                                        |                                                                 ----------
      Total comprehensive income                        |                                                                  1,123,186
                                                        |                                                                 ----------
                                          ------ -------| ---------- ----- --------- ---------- ----------  ----------    ----------
Balance as of December 31, 2002                         |
  (unaudited)                             16,200 180,000| $2,127,929 1,800 1,474,200 13,957,081 (1,233,450) (1,438,560)   14,889,000
                                                        |
Comprehensive income (unaudited)                        |
 Net Earnings                                 --      --|         --    --        --  2,639,060         --          --     2,639,060
 Other comprehensive income, net of tax:                |
   Net unrealized gains on investment         --      --|         --    --        --         --  2,001,068          --     2,001,068
    securities arising during the year                  |
    net of reclassification adjustment                  |
    for gains the year not of                           |
    reclassification adjustment for                     |
    gains included in net earnings                      |
                                                        |                                                                 ----------
      Total comprehensive income                        |                                                                  4,640,128
                                                        |                                                                 ----------
                                          ------ -------| ---------- ----- --------- ---------- ----------  ----------    ----------
Balance as of December 31, 2003                         |
  (unaudited)                             16,200 180,000| $2,127,929 1,800 1,474,200 16,596,141    767,618  (1,438,560)   19,529,128
                                                        |
Comprehensive income                                    |
 Net Earnings                                 --      --|         --    --        --  3,812,571         --          --     3,812,571
 Other comprehensive income, net of tax:                |
   Net unrealized gains on investment         --      --|         --    --        --         --    271,233          --       271,233
    securities arising during the year                  |
    net of reclassification adjustment                  |
    for gains the year not of                           |
    reclassification adjustment for                     |
    gains included in net earnings                      |
                                                        |                                                                 ----------
      Total comprehensive income                        |                                                                  4,083,804
                                                        |                                                                 ----------
                                          ------ -------| ---------- ----- --------- ---------- ----------  ----------    ----------
Balance as of December 31, 2004           16,200 180,000| $2,127,929 1,800 1,474,200 20,408,712  1,038,851  (1,438,560)   23,612,932
                                          ====== =======| ========== ===== ========= ==========  =========  ==========    ==========
</TABLE>

See accompanying notes to the financial statements

<TABLE>
                                           Cibola Corporation
                                        Statements of Cash Flows
                              Years Ended December 31, 2004, 2003 and 2002
<CAPTION>
                                                                             (unaudited)    (unaudited)
                                                                 2004            2003           2002
                                                              -----------    -----------    -----------
<S>                                                           <C>            <C>            <C>
Cash flows from operating activities
Net earnings                                                  $ 3,812,571    $ 2,639,060    $   745,410
Adjustments to reconcile net earnings to net cash
  provided by operating activities:
      Realized (gain) loss on sale of investment securities      (606,942)        58,456      1,612,197
      Amortization of bond premiums and discounts, net            (57,766)       (56,977)       (35,851)
      Changes in operating assets and liabilities:
         Accounts receivable                                       32,007        526,163       (582,708)
         Accrued interest                                        (345,838)       (69,928)       (29,628)
         Deposits                                                 729,600             --       (729,600)
         Other assets                                              24,721         24,653         24,653
         Accounts payable                                              --       (359,510)       359,574
         Income taxes payable                                          --        (27,443)       (37,218)
                                                              -----------    -----------    -----------
           Net cash provided by operating activities            3,588,353      2,734,474      1,326,829
                                                              -----------    -----------    -----------
Cash flows from investing activities
Purchase of investment securities                              (4,437,108)    (3,404,384)    (8,339,825)
Proceeds from the sale or maturity of investment securities     5,143,605      2,548,443      6,040,081
Receipts on notes receivable                                      211,920        275,000         20,000
Funding of notes receivable                                    (3,626,001)    (2,769,282)      (700,000)
Purchase of certificates of deposit                                    --        (97,000)      (672,000)
Proceeds from the maturity of certificates of deposit             122,000        552,000        515,000
                                                              -----------    -----------    -----------
Net cash used for investing activities                         (2,585,584)    (2,895,223)    (3,136,744)
                                                              -----------    -----------    -----------
Net increase (decrease) in cash and cash equivalents            1,002,769       (160,749)    (1,809,915)

Cash and cash equivalents as of beginning of year               2,745,304      2,906,053      4,715,968
                                                              -----------    -----------    -----------
Cash and cash equivalents as of end of year                   $ 3,748,073    $ 2,745,304    $ 2,906,053
                                                              ===========    ===========    ===========
Supplemental disclosure of cash flow information -
   Cash paid during the year for income taxes                 $   408,731    $   383,631    $   278,650
                                                              ===========    ===========    ===========
</TABLE>

See accompanying notes to the financial statements

<PAGE>

                               Cibola Corporation
                        Notes to the Financial Statements
                        December 31, 2004, 2003 and 2002
            (Information with respect to 2003 and 2002 is unaudited)

1      NATURE OF OPERATIONS

       Cibola Corporation (Cibola), a Wyoming corporation formed in 1996, is a
       natural gas marketing company located in Cody, Wyoming.

       NATURAL GAS MARKETING OPERATIONS

       Cibola's natural gas marketing operations are limited to one long-term
       sales contract and at least two long term purchase contracts. Cibola
       sells natural gas to a third party under a long-term sales agreement that
       expires August 31, 2005. Under the terms of the agreement, Cibola
       delivers a specified quantity of gas daily to the third party at a
       mandated deliver point at a fixed price that increases 5% annually. To
       provide the supply of natural gas to fulfill the sales agreement, Cibola
       has entered into purchase contracts with another third party to receive
       the same quantity of gas daily at the deliver point mandated by the sales
       agreement.

       With the excess cash flow generated from its gas marketing operations
       since 1996, Cibola has invested in a portfolio of investment securities
       and notes receivable.

2      SIGNIFICANT ACCOUNTING POLICIES

       BASIS OF ACCOUNTING

       Cibola's accounting policies reflect industry practices and conform to
       accounting principles generally accepted in the United States of America.
       The more significant of such policies are briefly described below.

       CASH AND CASH EQUIVALENTS

       Cash equivalents are highly liquid investments with an original maturity
       of three months or less at the date of purchase. This includes money
       market accounts held at brokerage firms.

       ACCOUNTS RECEIVABLE

       Accounts receivable are recorded at their invoiced amount and are not
       interest bearing. Uncollectible accounts have been historically
       infrequent and insignificant. In addition, management believes the risk
       of loss associated with uncollectible accounts is minimal. Accordingly,
       no allowance for uncollectible accounts has been recorded.

       RESTRICTED ASSETS

       As discussed in note 6, the preferred stock provides for individual
       sinking funds for Series A, Series B and Series C. The sinking fund
       provides for a periodic irrevocable pro rata transfer of excess cash
       flows to each sinking fund. Such assets are classified as restricted
       assets on the balance sheets.

       INVESTMENT SECURITIES

       Publicly-traded equity securities and debt securities are classified as
       available for sale and are recorded at market using the specific
       identification method. The fair value of investments available for sale
       is based on quoted market prices. Unrealized gains and losses (excluding
       other-than-temporary impairments) are reflected as accumulated other
       comprehensive income in equity. Equity investments in privately-held
       companies are recorded at cost.

       Premiums and discounts on investments are deferred and amortized/accreted
       to income over the term of the investment using a method that
       approximates the interest method. Gains and losses on sales are included
       in the statement of earnings and are computed on the basis of specific
       identification of the cost of each security.

       Investments are considered to be impaired when a decline in fair value is
       judged to be other-than-temporary. If the cost of an investment exceeds
       its fair value, we evaluate, among other factors, general market
       conditions, the duration and extent to which the fair value is less than
       cost, and our intent and ability to hold the investment. We also consider
       specific adverse conditions related to the financial health of and
       business outlook for the investee, including operational and financing
       cash flow factors. Once a decline in fair value is determined to be
       other-than-temporary, an impairment charge is recorded and a new cost
       basis in the investment is established.

       MAJORITY STOCKHOLDER

       Since formation of Cibola, The Beard Company (Beard) owns 144,000 of
       Cibola's 180,000 shares of common stock.

       REVENUE RECOGNITION

       Natural gas marketing sales are recognized when delivery has occurred and
       title has transferred.

       INCOME TAXES

       The results of Cibola's operations are included in the consolidated
       federal tax return of Beard. Under the tax allocation policy, Cibola
       calculates and remits its federal tax liability quarterly to Beard.
       Cibola, with its Wyoming operation, is not subject to state income tax.

       Cibola accounts for income taxes using the asset and liability method,
       whereby deferred tax assets and liabilities are recognized for the future
       tax consequences attributable to difference between the financial
       statement carrying amounts of assets and liabilities and their respective
       tax bases. Deferred tax assets and liabilities are measured using enacted
       tax rates expected to apply to taxable income in the years in which those
       temporary differences and carryforwards are expected to be recovered or
       settled. The effect on deferred tax assets and liabilities of a change in
       tax rates is recognized in income in the period that includes the
       enactment date. The principal items, which give rise to these
       differences, are the change in unrealized gains (losses) on investment
       securities.

       USE OF ESTIMATES

       Management has made a number of estimates and assumptions relating to the
       reporting of assets and liabilities and the disclosure of contingent
       assets and liabilities to prepare the financial statements in conformity
       with accounting principles generally accepted in the United States of
       America. Actual results could differ from these estimates.

3      CASH AND CASH EQUIVALENTS

       Cibola maintains cash balances at a banking institution, which at times,
       exceed federally insured limits. Cibola has not experienced any losses in
       such accounts and believes there is no exposure to any significant credit
       risk on cash and cash equivalents.

4      INVESTMENT SECURITIES

       A summary of investment securities at December 31, 2004 and 2003 is as
       follows:

<TABLE>
<CAPTION>
                                                                                               (unaudited)
                                                                               2004                2003
                                                                         ------------------ -------------------
<S>                                                                      <C>                     <C>
       Investments available for sale, at fair value                     $     9,294,417         10,046,973
       Equity investments, at the lower of cost or impaired value              2,618,000          1,610,000
                                                                         ------------------ -------------------
                                                                         $    11,912,417         11,656,973
                                                                         ================== ===================
</TABLE>

     Investments available for sale at December 31, 2004 and 2003 consist of the
     following:

<TABLE>
<CAPTION>
                                                                  Gross            Gross
                                               Amortized        Unrealized       Unrealized       Estimated
                                                  Cost            Gains           Losses         Fair Value
                                             --------------- ---------------- ---------------- ----------------
<S>                                        <C>               <C>              <C>            <C>
       December 31, 2004
       Publicly-traded equity stocks       $    4,717,162       1,221,835          (64,437)       5,874,560
       Mutual funds                             1,867,004         185,629          (68,488)       1,984,145
       Corporate bonds                          1,098,618          32,732           (1,933)       1,129,417
       Government bonds                           297,132           9,354             (191)         306,295
                                           --------------- ---------------- ---------------- ----------------
                                           $    7,979,916       1,444,550         (135,049)       9,294,417
                                           =============== ================ ================ ================

       December 31, 2003 (unaudited)
       Publicly-traded equity stocks       $    5,075,009         954,449          (84,740)       5,944,718
       Mutual funds                             1,904,484          74,421         (125,010)       1,853,895
       Corporate bonds                          1,371,791         165,709               --        1,537,500
       Government bonds                           678,421          34,947           (2,508)         710,860
                                           --------------- ---------------- ---------------- ----------------
                                           $    9,029,705       1,229,526         (212,258)      10,046,973
                                           =============== ================ ================ ================
</TABLE>

       A summary of proceeds from the sale of investment securities available
       for sale, as well as gross realized gains and losses for the years ended
       December 31, 2004 and 2003, is as follows:

<TABLE>
<CAPTION>
                                                                            (unaudited)        (unaudited)
                                                             2004               2003               2002
                                                      ------------------ ------------------ -------------------
<S>                                                 <C>                        <C>               <C>
       Proceeds                                     $       5,143,605          2,548,443          6,040,081
                                                      ------------------ ------------------ -------------------
       Gross realized gains                                   664,993            129,432            433,328
                                                      ------------------ ------------------ -------------------
       Gross realized losses                                  (58,051)          (187,888)        (2,045,525)
                                                      ================== ================== ====================
</TABLE>

       The contractual maturities of investments available for sale at December
       31, 2004 are shown below. Expected maturities may differ from contractual
       maturities because borrowers may have the right to call or prepay
       obligations with or without call or prepayment penalties:

       Due in less than one year           $       302,920
       Due in one to five years                  1,132,792
                                           -------------------
                                                 1,435,712
       Non-debt securities                       7,858,705
                                           -------------------
                                           $     9,294,417
                                           ===================

       Management believes cost of equity investments approximates fair value
       and fully expects to receive all principal and interest related to each
       of the underlying investments. Further, management expects to realize no
       actual loss related to any of the underlying investments at any time in
       the future and accordingly has not recognized any loss at December 31,
       2004.

       A summary of investment income for the years ended December 31, 2004,
       2003 and 2002 is as follows:

<TABLE>
<CAPTION>
                                                                            (unaudited)        (unaudited)
                                                             2004               2003               2002
                                                      ------------------ ----------------- --------------------
<S>                                                   <C>                     <C>                <C>
       Interest                                       $       647,305            458,722            368,160
       Dividend                                               210,523            160,203            108,568
       Realized gains (losses), net                           606,942            (58,456)        (1,612,197)
       Amortization of bond premiums and discounts, net        57,766             56,977             35,851
       Capital gains distributions                                661                521                912
       Investment fees                                        (60,538)           (53,073)           (41,341)
                                                      ------------------ ----------------- --------------------
                                                      $     1,462,659            564,894         (1,140,047)
                                                      ================== ================= ====================
</TABLE>

5      NOTES RECEIVABLE

       A summary of notes receivable at December 31, 2004 and 2003 is as
       follows:

<TABLE>
<CAPTION>
                                                                                                (unaudited)
                                                                                       2004         2003
                                                                               ----------------- --------------
<S>                                                                             <C>                 <C>
       Note  receivable  from an affiliate of a stockholder  with principal     $    3,220,000      1,730,000
       and interest  accruing at prime rate plus 1.00%  (effective  rate of
       6.25% at December 31, 2004) due at maturity on December 31, 2006

       Note  receivable  from an affiliate of a stockholder  with principal          1,875,000      1,125,000
       and  interest  accruing at 10.00% due at  maturity  on December  31,
       2005

       Note  receivable  from a  stockholder  with  principal  and interest            530,000             --
       accruing  at prime rate  (effective  rate of 5.25% at  December  31,
       2004) due at maturity on December 31, 2005

       Note  receivable  from  a  third  party  with  interest  at  8%  due            500,000        500,000
       quarterly  and  principal  due at  October  31,  2004  secured by an
       aircraft and a personal guarantee (subsequently collected in full)

       Note  receivable  from a stockholder  with interest paid annually at            400,202        400,202
       prime  rate plus  0.50%  (effective  rate of 5.75% at  December  31,
       2004) and principal due at maturity on December 31, 2005

       Note  receivable  from  a  third  party  with  interest  at  6%  due            389,001          3,000
       quarterly and principal due on demand

       Note  receivable  from an affiliate of a  stockholder  with interest            145,000             --
       paid monthly at 5.50% and  principal  due monthly from November 2005
       through  October  2010  secured by a second  mortgage on  borrower's
       corporate facility

       Note  receivable  from an affiliate of a  stockholder  with interest            125,000             --
       paid annually at prime rate plus 0.50%  (effective  rate of 5.75% at
       December  31,  2004) and  principal  due at maturity on December 31,
       2006

       Note  receivable  from a  stockholder  with  principal  and interest             91,544             --
       accruing at 15%  due at maturity on July 31, 2005

       Note  receivable  from a  stockholder  with  principal  and interest                 --        103,464
       accruing at 15%  due at maturity on July 31, 2004
                                                                                ---------------- --------------
                                                                                $    7,275,747      3,861,666
                                                                                ================ ==============
</TABLE>

6      PREFERRED STOCK

       In 1996, Cibola issued 9,979, 3,370 and 2,851 shares of, Series A, Series
       B and Series C preferred stock, respectively. In the event of any
       voluntary or involuntary dissolution, the preferred stock has a
       liquidation preference over the common stock of $50 million. The
       preferred stockholders are not entitled to receive dividends.

       The preferred stock provides for individual sinking funds for Series A,
       Series B and Series C. The sinking fund provides for a periodic
       irrevocable pro rata transfer of excess cash flows to each sinking
       fund. The assets that are included on the balance sheet at December 31,
       2004 are allocated to the sinking funds as follows:

                                                  (unaudited)
                                    2004              2003
                            ------------------ -------------------

       Series A             $    14,459,918         11,280,958
       Series B                   4,583,032          3,596,452
       Series C                   4,274,325          3,520,883
                            ------------------ -------------------
                            $    23,317,275         18,398,293
                            ------------------ -------------------

       The Series A, B and C preferred stockholders also own 36,000 shares of
       common stock.

7      NOTES RECEIVABLE - COMMON STOCK

       During April 1996, The Beard Company purchased 144,000 shares of Cibola's
       common stock. Such ownership represents 80% of the common stock
       outstanding. The $1,440,000 purchase price was paid with cash and a
       $1,438,560 note receivable. The note receivable balance remains at
       $1,438,560. Interest is payable semiannually at 8.25%. The note
       receivable is due June 30, 2006.

8      INCOME TAXES

       Income tax expense represents the amounts due to Beard under the tax
       sharing arrangement. The deferred tax liability at December 31, 2004 and
       2003 consists of the tax effect of the net unrealized gains on investment
       securities. Cibola has no deferred tax assets at December 31, 2004.

9      MAJOR CUSTOMER AND MAJOR SUPPLIER

       As discussed in note 1, all of the natural gas purchases are generated
       from one supplier and all of the natural gas sales are generated from one
       customer. The associated risks are significant. In the event one of the
       third parties failed to meet its obligation, Cibola would have to go to
       the current natural gas markets to satisfy Cibola's obligation by buying
       or selling at the then current price. The prices obtained in the current
       natural gas markets could result in a significant loss to Cibola. Both
       third parties have historically met their obligation. Cibola does not
       expect either third party to fail to meet its obligations.

10     UNCONDITIONAL PURCHASE COMMITMENTS

       As discussed in note 1, Cibola has entered into unconditional purchase
       commitments during 1996 and 1997 for natural gas that Cibola will use to
       satisfy its long term sales commitments. The purchase commitments covered
       by the two agreements are with one supplier. This commitment is not
       recorded on Cibola's balance sheet. Cibola purchased $4.3 million of
       natural gas under this commitment during 2005. Cibola's future obligation
       (undiscounted) under these purchase commitments approximates $2.9
       million.

11     SUBSEQUENT EVENTS

       Effective December 1, 2005, Cibola's minority stockholders exercised an
       option to purchase the 144,000 shares of common stock owned by Beard.

       In January  2006,  Cibola  redeemed  the Series B and Series C  preferred
       stock and the common  stock  held by the Series B and Series C  preferred
       stockholders. As a result, the sinking funds associated with Series B and
       Series  C with  certain  holdbacks  were  distributed  to the  respective
       preferred stockholders.EXHIBIT 10.5

                                THE BEARD COMPANY

                      2005 DEFERRED STOCK COMPENSATION PLAN

                           Adopted: November 17, 2005

<PAGE>
                                THE BEARD COMPANY
                      2005 DEFERRED STOCK COMPENSATION PLAN
                                                                         Page
                                                                         ----

ARTICLE I     Purpose and Effective Date...................................1

ARTICLE II    Definitions..................................................1

ARTICLE III   Shares Available Under the Plan..............................3

ARTICLE IV    Administration...............................................3

ARTICLE V     Eligibility..................................................3

ARTICLE VI    Deferral Elections In Lieu of Cash Payments..................3

ARTICLE VII   Settlement of Stock Units....................................4

ARTICLE VIII  Unfunded Status..............................................5

ARTICLE IX    Designation of Beneficiary...................................5

ARTICLE X     Adjustment Provisions........................................5

ARTICLE XI    Compliance with Rule 16b-3...................................6

ARTICLE XII   General Provisions...........................................6

<PAGE>

                                THE BEARD COMPANY
                      2005 DEFERRED STOCK COMPENSATION PLAN

                                    ARTICLE I

                           PURPOSE AND EFFECTIVE DATE

     1.1 Purpose. The Beard Company 2005 Deferred Stock Compensation Plan (the
"Plan") is intended to advance the interests of the Company and its shareholders
by providing a means to attract and retain highly-qualified persons to serve as
Officers and Directors and to promote ownership by Officers and Directors of a
greater proprietary interest in the Company, thereby aligning such interests
more closely with the interests of shareholders of the Company.

     1.2 Effective Date. This Plan shall become effective November 17, 2005
subject to approval of the shareholders of the Company by the affirmative vote
of a majority of shares of the Company present, or represented, and entitled to
vote on the subject matter, at the 2006 Annual Meeting of Shareholders of the
Company at which a quorum is present or by a written consent of the holders of a
majority of the Company's then outstanding shares.

                                   ARTICLE II

                                   DEFINITIONS

     The following terms shall be defined as set forth below:

     2.1 "Board" means the Board of Directors of the Company.

     2.2 "Compensation" means all or part of the cash remuneration payable to an
Officer in his or her capacity as an Officer.

     2.3 "Committee" means the Compensation Committee of the Board.

     2.4 "Company" means The Beard Company, an Oklahoma corporation, or any
successor thereto.

     2.5 "Deferral Date" means the date Fees or Compensation would otherwise
have been paid to the Participant.

     2.6 "Director" means any individual who is a member of the Board.

     2.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include rules thereunder and
successor provisions and rules thereto.

     2.8 "Fair Market Value" means the "Market Price" as defined in the
Certificate of Designations for the Company's outstanding Series A Convertible
Preferred Stock (the "Certificate"); provided, however, that in the event that
Fair Market Value is less than the "Conversion Price" as defined in the
Certificate, then the Fair Market Value shall be the average of (i) the last
sale of such security on any day there are sales of such securities on the OTC
Bulletin Board(R), or (ii) if there have been no sales on the OTC Bulletin
Board(R) on any day, the best asked price at the end of such day, in each such
case averaged over a period of 21 days consisting of the day as of which "Market
Price" is being determined and the 20 consecutive business days prior to such
day.

     2.9 "Fees" means all or part of any retainer and/or fees payable to a
Director in his or her capacity as a Director.

     2.10 "Officer" means any person so designated by the Board.

     2.11 "Participant" means a Director or Officer who defers Fees or
Compensation under Article VI of this Plan.

     2.12 "Reconciliation Events" means certain events which cause the amount of
Fees or Compensation actually paid during a period to differ from the amount of
Fees credited pursuant to Section 6.4, including, but not limited to, the
following: an increase or decrease in Fees paid, additional meetings held,
missed attendance at certain meetings, newly elected directors and Terminations
of Service.

     2.13 "Secretary" means the Corporate Secretary or any Assistant Corporate
Secretary of The Beard Company.

     2.14 "Shares" means shares of the common stock of The Beard Company, par
value $.000665 per share, or of any successor corporation or other legal entity
adopting this Plan.

     2.15 "Stock Units" means the credits to a Participant's Stock Unit Account
under Article VI of this Plan, each of which represents the right to receive one
Share upon settlement of the Stock Unit Account.

     2.16 "Stock Unit Account" means the bookkeeping account established by the
Company pursuant to Section 6.4.

     2.17 "Termination Date" means the date the Plan terminates pursuant to
Section 12.8.

     2.18 "Termination of Service" means termination of service as a Director or
Officer in any of the following circumstances:

          (a) Where the Participant voluntarily resigns or retires;

          (b) Where a Director is not re-elected (or elected in the case of an
     appointed Director) to the Board by the shareholders, or an Officer's
     employment is terminated by the Company or the Board; or

          (c) Where the Participant dies.

                                   ARTICLE III

                         SHARES AVAILABLE UNDER THE PLAN

     Subject to adjustment as provided in Article X, the maximum number of
Shares that may be distributed in settlement of Stock Unit Accounts under this
Plan shall not exceed 100,000. Such Shares may include authorized but unissued
Shares or treasury Shares.

                                   ARTICLE IV

                                 ADMINISTRATION

     4.1 This Plan shall be administered by the Board's Compensation Committee,
or such other committee or individual as may be designated by the Board.
Notwithstanding the foregoing, no Director who is a Participant under this Plan
shall participate in any determination relating solely or primarily to his or
her own Shares, Stock Units or Stock Unit Account.

     4.2 It shall be the duty of the Committee to administer this Plan in
accordance with its provisions and to make such recommendations of amendments or
otherwise as it deems necessary or appropriate.

     4.3 The Committee shall have the authority to make all determinations it
deems necessary or advisable for administering this Plan, subject to the
limitations in Section 4.1 and other explicit provisions of this Plan.

                                    ARTICLE V

                                   ELIGIBILITY

     Each Director and Officer of the Company shall be eligible to defer Fees
and Compensation under Article VI of this Plan.

                                   ARTICLE VI

                   DEFERRAL ELECTIONS IN LIEU OF CASH PAYMENTS

     6.1 General Rule. Each Director or Officer may, in lieu of receipt of Fees
or Compensation, defer such Fees or Compensation in accordance with this Article
VI.

     6.2 Timing of Election. Each eligible Director or Officer who wishes to
defer Fees or Compensation under this Plan must make an irrevocable written
election prior to January 1 of the calendar year in which the Fees or
Compensation would otherwise be paid; provided, however, that a newly-elected or
appointed Director or Officer ("New Participant Elections"), will be allowed to
make an election within 30 days of becoming eligible to defer Fees or
Compensation earned after such date. An election by a Director or an Officer
previously in effect shall be deemed to be continuing and therefore applicable
to Fees or Compensation to be paid unless the Director or Officer revokes or
changes such election by filing a new election prior to January 1 of the next
year in which Fees or Compensation will be paid.

     6.3 Form of Election. An election shall be made in a manner satisfactory to
the Secretary. Generally, an election shall be made by completing and filing the
specified election form with the Secretary of the Company within the period
described in Section 6.2. At minimum, the form shall require the Director or
Officer to specify the following:

          (a) a percentage (for Directors in 25% increments, and for Officers
     not less than 10% and in 5% increments thereafter), not to exceed an
     aggregate of 100% of the Fees or Compensation to be deferred under this
     Plan; and

          (b) the manner of settlement in accordance with Section 7.2.

     6.4 Establishment of Stock Unit Account. The Company will establish a Stock
Unit Account for each Participant. All Fees or Compensation deferred pursuant to
this Article VI shall be credited to the Participant's Stock Unit Account as of
the Deferral Date and converted to Stock Units as follows: The number of Stock
Units shall equal the deferred Fees or Compensation divided by the Fair Market
Value of a Share on the Deferral Date, with fractional units calculated to three
(3) decimal places.

     6.5 Credit of Dividend Equivalents. As of each dividend payment date with
respect to Shares, each Participant shall have credited to his or her Stock Unit
Account an additional number of Stock Units equal to: the per-share cash
dividend payable with respect to a Share on such dividend payment date
multiplied by the number of Stock Units held in the Stock Unit Account as of the
close of business on the record date for such dividend divided by the Fair
Market Value of a Share on such dividend payment date. If dividends are paid on
Shares in a form other than cash, then such dividends shall be notionally
converted to cash, if their value is readily determinable, and credited in a
manner consistent with the foregoing and, if their value is not readily
determinable, shall be credited "in kind" to the Participant's Stock Unit
Account.

     6.6 Reconciliations. The Company shall record all Reconciliation Events
and, as soon as reasonably practicable after the end of each calendar quarter or
after a Termination of Service, make appropriate adjustments to each
Participant's Stock Unit Account to reflect such Reconciliation Events;
provided, however, the Fair Market Value used to determine such adjustments
shall be the same Fair Market Value used to determine the number of Stock Units
credited to such Participant's Stock Unit Account.

                                   ARTICLE VII

                            SETTLEMENT OF STOCK UNITS

     7.1 Settlement of Account. The Company will settle a Participant's Stock
Unit Account in the manner described in Section 7.2 as soon as administratively
feasible following the earlier of (i) notification of such Participant's
Termination of Service or (ii) the Termination Date. Notwithstanding the
foregoing, no distribution shall be made earlier than six months after the date
of Termination of Service with respect to a Participant who is a "key employee"
(as defined in I.R.C. Section 416(i)) if the Company's stock is traded on an
established securities market at the time of Termination of Service.

     7.2 Payment Options. An election filed under Article VI shall specify
whether the Participant's Stock Unit Account is to be settled by delivering to
the Participant (or his or her beneficiary) the number of Shares equal to the
number of whole Stock Units then credited to the Participant's Stock Unit
Accounts, in (a) a lump sum, or (b) substantially equal annual installments over
a period not to exceed ten (10) years. If, upon lump sum distribution or final
distribution of an installment, less than one whole Stock Unit is credited to a
Participant's Stock Unit Account, cash will be paid in lieu of fractional shares
on the date of such distribution.

     7.3 Continuation of Dividend Equivalents. If payment of Stock Units is
deferred and paid in installments, the Participant's Stock Unit Account shall
continue to be credited with dividend equivalents as provided in Section 6.5.

     7.4 In Kind Dividends. If any "in kind" dividends were credited to the
Participant's Stock Unit Account under Section 6.5, such dividends shall be
payable to the Participant in full on the date of the first distribution of
Shares under Section 7.2.

                                  ARTICLE VIII

                                 UNFUNDED STATUS

     The interest of each Participant in any Fees or Compensation deferred under
this Plan (and any Stock Units or Stock Unit Account relating thereto) shall be
that of a general creditor of the Company. Stock Unit Accounts, and Stock Units
(and, if any, "in kind" dividends) credited thereto, shall at all times be
maintained by the Company as bookkeeping entries evidencing unfunded and
unsecured general obligations of the Company.

                                   ARTICLE IX

                           DESIGNATION OF BENEFICIARY

     Each Participant may designate, on a form provided by the Committee, one or
more beneficiaries to receive the Shares described in Section 7.2 in the event
of such Participant's death. The Company may rely upon the beneficiary
designation last filed with the Committee, provided that such form was executed
by the Participant or his or her legal representative and filed with the
Committee prior to the Participant's death.

                                    ARTICLE X

                              ADJUSTMENT PROVISIONS

     In the event any recapitalization, reorganization, merger, consolidation,
spin-off, combination, repurchase, exchange of shares or other securities of the
Company, stock split or reverse split, or similar corporate transaction or event
affects Shares such that an adjustment is determined by the Board or Committee
to be appropriate to prevent dilution or enlargement of Participants' rights
under this Plan, then the Board or Committee will, in a manner that is
proportionate to the change to the Shares and is otherwise equitable, adjust the
number or kind of Shares to be delivered upon settlement of Stock Unit Accounts
under Article VII.

                                   ARTICLE XI

                           COMPLIANCE WITH RULE 16b-3

     Subject to Section 6.2, it is the intent of the Company that this Plan
comply in all respects with applicable provisions of Rule 16b-3 under the
Exchange Act in connection with the deferral of Fees and Compensation.

                                   ARTICLE XII

                               GENERAL PROVISIONS

     12.1 No Right to Continue as an Officer or Director. Nothing contained in
this Plan will confer upon any Participant any right to continue to serve as an
Officer or Director.

     12.2 No Shareholder Rights Conferred. Nothing contained in this Plan will
confer upon any Participant any rights of a shareholder of the Company unless
and until Shares are in fact issued or transferred to such Participant in
accordance with Article VII.

     12.3 Change to the Plan. The Board may amend, alter, suspend, discontinue,
extend, or terminate the Plan without the consent of shareholders or
Participants, except that any such action will be subject to the approval of the
Company's shareholders at the next annual meeting of shareholders having a
record date after the date such action was taken if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, or if the Board determines in its discretion to seek such shareholder
approval; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
with respect to any Stock Units credited to his or her Stock Unit Account.

     12.4 Consideration; Agreements. The consideration for Shares issued or
delivered in lieu of payment of Fees or Compensation will be the service of the
Officer or Director during the period to which the Fees or Compensation paid in
the form of Shares related.

     12.5 Compliance with Laws and Obligations. The Company will not be
obligated to issue or deliver Shares in connection with this Plan in a
transaction subject to the registration requirements of the Securities Act of
1933, as amended, or any other federal or state securities law, any requirement
under any listing agreement between the Company and any national securities
exchange or automated quotation system or any other laws, regulations, or
contractual obligations of the Company, until the Company is satisfied that such
laws, regulations, and other obligations of the Company have been complied with
in full. Certificates representing Shares delivered under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations, and other obligations of the Company, including
any requirement that a legend or legends be placed thereon.

     12.6 Limitations on Transferability. Stock Units and any other right under
the Plan that may constitute a "derivative security" as generally defined in
Rule 16a-1(c) under the Exchange Act will not be transferable by a Participant
except by will or the laws of descent and distribution (or to a designated
beneficiary in the event of a Participant's death); provided, however, that such
rights may be transferred to one or more trusts or other beneficiaries during
the lifetime of the Participant in connection with the Participant's estate
planning, but only if and to the extent then permitted under Rule 16b-3 and
consistent with the registration of the offer and sale of Shares on Form S-8 or
a successor registration form of the Securities and Exchange Commission. Stock
Units and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the claims of
creditors.

     12.7 Governing Law. The validity, construction, and effect of the Plan and
any agreement hereunder will be determined in accordance with the laws of the
State of Oklahoma, without giving effect to principles of conflicts of laws, and
applicable federal law.

     12.8 Plan Termination. Unless earlier terminated by action of the Board or
Executive Committee of the Board, the Plan will remain in effect until the
earlier of (i) such time as no Shares remain available for delivery under the
Plan and the Company has no further rights or obligations under the Plan or (ii)
November 17, 2015. If the Plan terminates due to the lack of Shares, the Plan
will terminate effective November 17 of the year in which this event occurs.

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