AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT

WHEN RECORDED RETURN TO:

First Fidelity Bank, N.A.

5101 N. Classen Blvd., Suite 500

Oklahoma City, OK 73118

Attn: Danny Lawson

AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF PRODUCTION,

SECURITY AGREEMENT AND FINANCING STATEMENT

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AMENDED AND RESTATED DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT AND FINANCING STATEMENT dated as of March 25, 2008 (the “Deed of Trust”), between THE BEARD COMPANY (“Borrower”), an Oklahoma corporation having its principal place of business at 5600 N. May Avenue, Oklahoma City, Oklahoma 73112, and the PUBLIC TRUSTEE OF DOLORES COUNTY, COLORADO (“Trustee”) for the benefit of FIRST FIDELITY BANK, N.A. , a national banking association, 5101 North Classen Boulevard, Suite 500, Oklahoma City, Oklahoma 73118 (the “Beneficiary”).

A POWER OF SALE HAS BEEN GRANTED IN THIS DEED OF TRUST. A POWER OF SALE MAY ALLOW THE TRUSTEE TO TAKE THE PROPERTIES IN TRUST AND SELL THEM WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE BORROWER UNDER THIS DEED OF TRUST.

THIS INSTRUMENT CONTAINS AFTER ACQUIRED PROPERTY PROVISIONS, SECURES THE PAYMENT OF FUTURE ADVANCES, AND COVERS PROCEEDS OF COLLATERAL.

R E C I T A L S

A.        The Borrower executed and delivered to Beneficiary that certain promissory note dated June 8, 2007, in the original principal amount of $1,500,000 (the “Note”). As security for the Note, Borrower executed a Deed of Trust dated June 8, 2007 and which was recorded in Dolores County on June 29, 2007 in Book 363 beginning at Page 390. On March 25, 2008, the Borrower and Beneficiary executed a Change in Terms Agreement in connection with the Note.

B.        Borrower has agreed to enter into this Deed of Trust to secure payment of the Note as modified and revised by the Change in Terms Agreement.

C.         For purposes of this Deed of Trust, the term “Properties” shall refer to the properties described in paragraphs 1. through 9. of the Granting Clause of this Deed of Trust. Pursuant to Assignment and Bill of Sale of Borrower to Charles R. Wiggins and Ken Kamon, dated effective February 1, 2008 (the “Assignment”), Borrower has sold, assigned and transferred an undivided 35% interest in and to Borrower’s interest, as of February 1, 2008, in the Properties (the “Assigned Interests”) and has retained an undivided 65% interest in and to Borrower’s interest, as of February 1, 2008, in the Properties (the “Retained Interests”).

D.        Beneficiary has consented to the sale of a 35% interest in Borrower’s interest in the Properties, and to evidence consent Beneficiary has given a partial release of the previously filed Deed of Trust.

G R A N T I N G C L A U S E

NOW, THEREFORE, the Borrower, in order to secure the Indebtedness (as herein defined) and obligations hereinafter described, does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN, and SET OVER to Trustee in trust, and specifically grant to and confirm upon the Trustee in trust, the power to sell, the following described property:

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All of Borrower’s rights, title, interests, in and to the properties described in the previously filed Deed of Trust (less and except the Assigned Interest) together with paragraphs 1. through 9. below, and the corresponding rights, estates, powers and privileges appurtenant to those rights, interests, and properties, less and except the Assigned Interests previously conveyed pursuant to the Assignment. The rights, title, and interests hereby conveyed constitute the Retained Interests, as defined above.

1.         The lands specifically described on Exhibit A (the "Lands"), even though the interests of Borrower and the Lands may be incorrectly described, or a description of an interest is omitted from Exhibit A; and, all rights, title, and interests in, to, under, or derived from all oil, gas, carbon dioxide and mineral leases and leasehold fee or mineral interests and all other interests of whatever character, insofar as the same covers or relates to the Lands described in Exhibit A even though an interest may be incorrectly described or omitted from Exhibit A. It is expressly understood that the interests hereby described include all rights, title, and interests to all depth intervals, from the surface down to and including the basement rock, in lands included within the boundaries of the McElmo Dome (Leadville) Unit, whether or not said lands are described on Exhibit A. Exhibit A is attached to and made a part of this Deed of Trust for all purposes.

2.         All rights, title, and interests in, to, and under oil, gas, carbon dioxide and mineral leases (the "Leases") covering the Lands described in Exhibit A, including any renewals, extensions, or ratifications, and the oil and gas and carbon dioxide leasehold estates and other interests in the lands described on Exhibit A.

3.         All rights, title, and interests in all rights, privileges, benefits, and powers conferred on the holder of the Leases and Lands with respect to the use and occupation of the surface and the subsurface depths under the Lands and Leases.

4.         All rights, title, and interests in any pooled or unitized acreage or rights included, in whole or in part, within the Lands, including all oil and gas and carbon dioxide production from the pool or unit allocated to such properties (including, without limitation, units formed under orders, rules, regulations, or other official acts of any state or other authority having jurisdiction and so called "working interest units" created under operating agreements or otherwise) and interests in any wells within the unit or pool associated with such properties, whether the unitized or pooled oil and gas and carbon dioxide production comes from wells located within or without the areas covered by the Lands, and all tenements, hereditaments, and appurtenances belonging to the properties.

5.         All rights, title, and interests in all of the permits, licenses, servitudes, easements, rights of way, orders, gas and carbon dioxide purchase and sale contracts, crude oil purchase and sale contracts or agreements, surface leases, farmin and farmout agreements, acreage contribution agreements, operating agreements, unit agreements, processing agreements, options, leases of equipment or facilities, and other contracts, agreements, and rights, and any amendments to any of the foregoing, whether or not the same appear of record in the county where the Lands are located, and which are appurtenant to, affect, are used or held for use in connection with either the ownership, operation, production, treatment or marketing of oil and gas and carbon dioxide, or any or all of them, and the sale or disposal of water, hydrocarbons, carbon dioxide or associated substances from the Lands and Leases; It is expressly understood, however, that Borrower has, pursuant to the Assignment, previously conveyed all of Borrower’s interest in the Trinity Rights, defined and described in the Assignment, and such interest is hereby expressly excluded from this Deed of Trust.

6.         All rights, title, and interests in the personal and/or real property located in or on the Lands and Leases or used in their operation, in whole or in part, including, without limitation, crude oil, condensate, or products (in storage or in pipelines), wells, well equipment, casing, tanks, boilers, buildings, tubing, pumps, motors, valves, fixtures, machinery and other equipment, pipelines, gathering systems, power lines, telephone lines, roads, field processing plants, and all other improvements used in operations. IT IS AGREED THAT THE PERSONAL PROPERTY, AND ANY PERSONAL PROPERTY THAT BECAME CLASSIFIED OTHERWISE BY VIRTUE OF BEING PERMANENTLY ATTACHED TO REAL PROPERTY, IS BEING CONVEYED UNDER THIS DEED OF TRUST AS IS AND WHERE IS, WITHOUT WARRANTY OF MERCHANTABILITY, CONDITION OR FITNESS FOR A PARTICULAR PURPOSE, EITHER EXPRESS OR IMPLIED.

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7.         To the extent transferable, the benefit of and the right to enforce the rights, covenants, and warranties, if any, under the terms and conditions of any of the agreements and contracts described in paragraph 5. above, which Borrower is entitled to enforce, with respect to the Properties, against Borrower’s predecessors in title to the Properties and against any other party to such agreements and contracts.

8.         To the extent necessary to allow Beneficiary to have full use of and access to the Lands, Borrower grants such right of ingress and egress, rights of way and easements, and their full and uninterrupted use, across any lands which Borrower may own or where Borrower may be the lessee under an oil, gas, carbon dioxide and mineral lease(s), over or through which Beneficiary crosses or has the right to cross for use and access to the Lands described in Exhibit A. This grant is limited to the rights of Borrower to grant such rights of ingress and egress, rights of way, and easements under agreements, deeds, or leases through which Borrower claims title.

9.         All other rights and obligations arising under contract or otherwise by law, or by the occurrence of conditions precedents, which may or may not yet have occurred, owned in whole or in part by Borrower, which rights and obligations are incidental to the Properties described in paragraphs 1. through 8. above, including the right, if any, to operate the Properties.

TO HAVE AND TO HOLD all of Borrower’s right, title and interest in and to the Properties unto the Trustee and his successors or substitutes and to his or their successors and assigns, IN TRUST, however, upon the terms, provisions and conditions herein set forth.

ARTICLE 1

INDEBTEDNESS

This Deed of Trust is given to secure and enforce the payment and performance of the following indebtedness and obligations, to-wit:

(a)       All indebtedness arising pursuant to the provisions of this Deed of Trust, and any and all renewals or extensions of such indebtedness, or any part thereof;

(b)       All loans, principal, interest, fees, expenses, obligations, and liabilities of the Borrower arising pursuant to the Note, and all obligations and liabilities of Borrower, absolute or contingent, due or to become due, which are now or may at any time hereafter be owing by Borrower with respect to the Note, and all renewals, extensions or modifications thereof or substitutions therefore, and all other documents executed in connection therewith;

(c)       The performance of all obligations and liabilities of the Borrower under this Deed of Trust as well as all renewals, extensions, modifications and amendments of the foregoing.

The words “Indebtedness,” as used herein, shall mean all the indebtedness, obligations, and liabilities described or referred to immediately above in sub-paragraphs (a) through (c), inclusive.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

Borrower represents, warrants, and covenants that this Deed of Trust is the legal, valid, and binding obligations of the Borrower enforceable in accordance with its respective terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights; that Borrower is the lawful owner of undivided interests or rights in and to the Properties as set forth in Exhibit ”A” and the properties assigned in Article 5 hereof and that Borrower has good right and authority to grant, bargain, sell, transfer, assign, affect, pledge, and hypothecate the same; in light of the Subordination Agreement and Release executed concurrently herewith with respect to this Deed of Trust, that this Deed of Trust is a first and prior lien upon the Properties, superior to the interests of Borrower and all others; that Borrower warrants and will forever defend the title to the Properties against the lawful claims of all persons whomsoever and shall not convey, lease, transfer, encumber or assign any interest in the Properties; that all the Leases are valid and subsisting and are in full force, and the Properties

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are not subject to any burdens or charges except as reflected in Exhibit ”A”; that the Properties and the properties assigned in Article 5 hereof are free and clear from all liens, burdens, and encumbrances except the lien evidenced by this Deed of Trust and such liens as may be set forth on Exhibit ”A;” that, to Borrower’s actual knowledge, all producing wells in which Borrower has any right or interest located on the Properties or property unitized therewith have been drilled, operated, and produced in conformity with all applicable laws and rules, regulations, and orders of all regulatory authorities having jurisdiction and are subject to no penalties on account of past production; that, to Borrower’s actual knowledge, none of such wells are deviated from the vertical more than the maximum permitted by applicable laws, rules, regulations, and orders; that such wells are in fact bottomed under and are producing from, and the well bores are wholly within, the lands covered by the Properties or properties unitized therewith. The acquisition and ownership by Borrower of the Properties and the properties assigned in Article 5, and the execution and delivery of this Deed of Trust and compliance with the provisions hereof, were and are within its corporate powers and did not and will not contravene any provision of any applicable laws, rules, regulations, or orders, or of its governing documents or constitute a default under, or result in the creation of any lien, charge, encumbrance, or security interest (other than the lien of the security interest created by this Deed of Trust) upon any of its property or assets pursuant to any indenture or other agreement or instrument to which it is a party or by which it or its property may be bound or affected. These warranties and representations shall at all times be construed to be for the benefit of the Beneficiary, and they shall remain in full force and effect, notwithstanding the assignment hereof, or the partial release of the lien hereof, or any foreclosure thereof.

ARTICLE 3

COVENANTS

3.1     The Borrower, for Borrower and Borrower’s successors covenants to use its commercially reasonable efforts (a) properly to operate, or cause to be operated properly, and to keep, or cause to be kept, in full force and effect the Leases described at Exhibit “A” and to perform, or cause to be performed, all covenants, terms and conditions whether express or implied imposed upon the original lessee, or his assigns, whether continued in any such Lease, or in any assignment thereof, and continuously to operate or cause to be operated in a good and workmanlike manner the well or wells now or hereafter located on the land covered by the Leases described in Exhibit “A”; (b) to comply with all applicable laws, and all rules, regulations and orders of all regulatory authorities having jurisdiction to regulate the operation of the Properties and production and sale of carbon dioxide, oil, gas and other minerals produced thereupon; (c) to carry, in standard insurance companies satisfactory to the Beneficiary, in respect of all activities in which Borrower might incur personal liability for the death or injury of an employee or third person, or damage to or destruction of another’s property, worker’s compensation insurance, and public liability and property-damage insurance, in such amounts as may, in the Beneficiary’s opinion, be adequate, and, in respect of all personal property and fixtures constituting a part of the Properties, to carry, in standard insurance companies satisfactory to the Beneficiary, insurance against loss or damage by fire, lightning, hail, tornado, explosion and such other risks as are usually insured against in similar businesses, in amounts satisfactory to the Beneficiary, and with loss payable to the Beneficiary as its interest may appear, and upon request of the Beneficiary promptly to deliver the policies to the Beneficiary; (d) to pay, or cause to be paid, before delinquent, all lawful taxes of every character in respect of all of the Properties, and all taxes in respect of the carbon dioxide, oil, gas and other minerals produced and to be produced from the Properties, or incident to and in connection with the operation or development thereof and the production of carbon dioxide, oil, gas and other minerals therefrom, as well as all Federal or State income taxes payable generally by Borrower, regardless of their relation to the Properties, and to pay, as and when due, all State and Federal Social Security taxes, payments and contributions for which Borrower may be liable; (e) at all times to maintain, preserve, and keep all said property, and all appurtenances thereto, and all buildings, improvements, machinery, equipment, pipe lines, fixtures, and other personal property of every kind and character, in respect of the Properties, in thorough repair, working order and condition, and from time to time make all necessary and proper repairs, renewals, replacements and substitutions; (f) in respect of all the Properties, promptly to pay all bills for labor and material, and never to permit to be created or to exist, in respect of any of the Properties, any other or additional lien, on a parity with or superior to the lien hereof; (g) at any time and from time to time, upon request by the Beneficiary, forthwith at Borrower’s expense to execute and deliver to the Beneficiary, any and all additional instruments and further

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assurances as may be necessary or proper, in the Beneficiary’s opinion, to effect the intent of these presents; (h) to keep accurate books and records in accordance with generally accepted accounting principles consistently applied in which full, true and correct entries shall be promptly made as to all operations on the Properties, all such books and records to be subject at all times during reasonable business hours to inspection by the Beneficiary, or its duly authorized agent or agents; (i) from time to time, upon request of the Beneficiary, promptly to furnish to the Beneficiary such financial statements and reports relating to Borrower, and Borrower’s business affairs, and the operation of the Properties as the Beneficiary may reasonably request (j) to maintain Borrower’s right to do business in Oklahoma and in Colorado; (k) to pay all Indebtedness in accordance with the terms thereof and hereof, or when the maturity thereof may be accelerated in accordance with the terms thereof or hereof; and (l) to notify the Beneficiary immediately if it becomes aware of the occurrence of any Event of Default or of any fact, condition or event that only with the giving of notice or passage of time or both, could become an Event of Default, or the failure of the Borrower to observe any of its undertakings hereunder; and (m) not to transfer, sell, assign, hypothecate, pledge or encumber any of the Properties.

3.2     With respect to any part of the Properties which is not a leasehold or working interest, Borrower agrees to take all such action and to exercise all rights and remedies as are available to Borrower to cause the owner or owners of the working interest in such Properties to comply with the covenants and agreements contained herein. With respect to any part of the Properties which is a working interest but which is operated by a party other than Borrower, Borrower agrees to take all such action and to exercise all rights and remedies as are available to Borrower (including, but not limited to, all rights under any operating agreements) to cause the party who is the operator of such Property to comply with the covenants and agreements contained herein. Borrower will immediately notify the Beneficiary of any failure of the operator of any of the Properties to perform any such obligation, and in cooperation with the Beneficiary, will take such steps as may be expedient to secure compliance therewith, or obtain appointment of a different operator.

3.3     Any and all covenants in this Deed of Trust may from time to time, by instrument in writing signed by Beneficiary and Borrower, and delivered to Borrower, be waived to such extent and in such manner as the Beneficiary may desire, but no such waiver shall ever affect or impair the Beneficiary’s rights or liens hereunder, except to the extent so specifically stated in such written instrument.

ARTICLE 4

DEFAULTS AND REMEDIES

4.1       Any of the following shall constitute Events of Default (each herein called an “Event of Default”):

(a)        Nonpayment . (i) Default in the due and punctual payment of any principal of the Indebtedness, or (ii) default in the due and punctual payment of any interest on the Indebtedness or any fee or expense payable hereunder or under the Note.

(b)        Covenant Default . The Borrower shall default in the due performance or observance by it of any term, covenant or agreement contained in this Deed of Trust, and such failure shall continue for thirty (30) days after the earlier of: (i) notice of such default from the Beneficiary; or (ii) the Beneficiary is notified of such default or should have been so notified pursuant to the provisions of Section 3.1(n) hereof.

(c)        Representations and Warranties . Any representation, warranty or statement made by the Borrower herein or otherwise in writing in connection herewith or in connection with the Note and the agreements referred to herein or therein or in any financial statement, certificate or statement signed by any officer or employee of the Borrower and furnished pursuant to any provision hereof or of the Note shall be breached, or shall be materially false, incorrect or incomplete when made.

(d)        Other Debt . The Borrower shall fail to make any payment of principal or interest on any other indebtedness of Borrower.

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(e)        Default in Note . Any event of default shall occur under the Note and the default shall continue unremedied beyond any grace or cure period.

(f)         Judgments and Decrees . The Borrower shall suffer a final judgment for the payment of money and shall not discharge the same within a period of thirty (30) days. Any order, judgment or decree shall be entered in any proceeding against the Borrower decreeing the split up of the Borrower and such order shall remain undischarged or unstayed for a period in excess of thirty (30) days.

(g)        Bankruptcy . (i) The Borrower pursuant to or within the meaning of any Bankruptcy Law (as herein defined) (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in any involuntary case, (c) consents to the appointment of a Custodian (as herein defined) of it for all or substantially all of its property, or (d) makes a general assignment for the benefit of its creditors; or (ii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that remains unstayed and in effect for thirty (30) days that (a) is for relief against the Borrower in an involuntary case, (b) appoints a Custodian of the Borrower for all or substantially all of its property, or (c) orders the liquidation of the Borrower. The term “Bankruptcy Law” means Title 11, U. S. Code or any similar federal or state law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

(h)        Validity of Note . The Note shall cease to be a legal, valid and binding agreement enforceable against any party executing the same in accordance with the respective terms thereof, or shall in any way be terminated, or become or be declared ineffective or inoperative, or shall in any way whatsoever cease to give or provide the respective rights, remedies, powers and privileges intended to be created thereby.

(a)       The Beneficiary may declare the entire balance of principal of the Indebtedness or any portion thereof, along with all accrued interest thereon, immediately due and payable, whereupon the same shall forthwith become due and payable, without notice or demand, presentment for payment, notice of non-payment, protest, notice of protest, notice of intent to accelerate, notice of acceleration, and all other notices, all of which the Borrower hereby expressly waives to the full extent permitted by applicable law; and

(b)       The Beneficiary shall have the right to declare a violation of any of the covenants herein contained and elect to advertise the Properties for sale and demand such sale, then, upon filing notice of such election and demand for sale with the Trustee, who shall upon receipt of such notice of election and demand for sale cause a copy of the same to be recorded in the office of the Clerk and Recorder of the county in which the Properties are situated, it shall and may be lawful for the Trustee to sell and dispose of the same (en masse or in separate parcels, as Beneficiary may designate), and all the right, title and interest of said Borrower, their successors or assigns therein, at public auction [*at the main front door of the Courthouse] in the county in which the Properties are located or on the Properties or any part thereof, or such other place as may be authorized or permitted by law, as may be specified in the notice of said sale, for the highest and best price the same will bring