EXHIBIT 1

                FIRST AMENDMENT TO THE THIRD AMENDED AND RESTATED
                        AGREEMENT OF LIMITED PARTNERSHIP
                                       OF
                         HALLWOOD ENERGY PARTNERS, L.P.


      This First Amendment (this "Amendment") to the Third Amended and  Restated
Agreement  of  Limited  Partnership  of  Hallwood  Energy  Partners,  L.P.  (the
"Partnership"), is executed by Hallwood Energy Corporation, a Texas corporation,
as General Partner of the Partnership  (the "General Partner"), and  by Hallwood
Energy Corporation, on behalf of the Limited  Partners on the books and  records
of the Partnership, pursuant to  the powers of attorney executed by such Limited
Partners.

                              W I T N E S S E T H:

      WHEREAS, the board of  directors of the General Partner deems it  to be in
the best  interest of the  Partnership to  amend the Third  Amended and Restated
Agreement of Limited Partnership (the "Partnership Agreement") to allow for  the
creation and issuance of Class C Units (the "Class C Units") of the Partnership;
and

      WHEREAS, a  vote of the Limited  Partners is not  required to  approve the
Amendment and the issuance of the Class C Units.

      NOW,  THEREFORE,  in   consideration  of  the  foregoing  the  Partnership
Agreement is amended as follows:

      1.    Definitions.   Capitalized terms  used in  this  Amendment that  are
defined in  the Partnership  Agreement shall have  the same  meaning as assigned
therein when used in this Amendment, unless otherwise provided herein.

      2.    Amendments to the Partnership Agreement.

            A.    Article  I   is  hereby   amended  by   adding  the  following
definitions, to be deemed placed in the appropriate alphabetical order:

                  (i)   "Adjusted Capital Account:   A Partner's Capital Account
balance  (as determined after  giving effect to all  adjustments attributable to
allocations  of items  of profit and  loss realized by the  Partnership, and all
adjustments  attributable  to  contributions  and  distributions  of  money  and
property effected,  on or  before  the effective  date of  such  determination),
modified as follows:

                        (a)   Decreased   by   the  items   (if   any)   of  the
Partnership's loss  that reasonably are expected to be allocated to such Partner
pursuant  to section  704(e)(2) or  706(d) of  the  Code or  Treasury Regulation
section  1.751-1(b)(2)(ii)  (as determined  under  Treasury  Regulation  section
1.704-1(b)(2)(ii)(d));

                        (b)   Decreased  by  adjustments   that  reasonably  are
expected to be made  to such Partner's Capital Account under Treasury Regulation
section 1.704-1(b)(2)(iv)(k);

                        (c)   Increased by the amount (if any) of such Partner's
share of nonrecourse  minimum gain determined in accordance with  the provisions
of Treasury Regulation section 1.704-2(g)(1);

                        (d)   Increased by the amount (if any) of such Partner's
share of partner nonrecourse debt minimum gain determined in accordance with the
provisions of Treasury Regulation section 1.704-2(i)(5); and

                        (e)   Increased by the amount (if any) that such Partner
is obligated to contribute to the Partnership pursuant to  any provision of this
Agreement  or is  treated as being obligated  to contribute  subsequently to the
capital  of the  Partnership  as  determined under  Treasury  Regulation section
1.704-1(b)(2)(ii)(c)."

                  (ii)  "Class C Units:  Defined in Article XX."

                  (iii) "Class  C Partners:   The Record Holders of  the Class C
      Units."

                  (iv)  "Class  A Units:   The  class of Partnership  Units that
were the  only class  of Partnership Units  to be  traded on  the American Stock
Exchange immediately prior to the date of this Amendment."

                  (v)   "Excess  Capital  Account:    The  excess  of  a  unit's
positive Capital  Account balance over the Unpaid Preference Amount attributable
to such  unit.   The Excess Capital Account  of each  Class A  Unit and Class  B
Subordinated Unit shall be zero."

                  (vi)  "Terminating Capital  Transaction:   Any sale  or  other
disposition of  all or  substantially all  of the then remaining  assets of  the
Partnership  which  is   entered  into  in  connection   with  the  dissolution,
termination  and winding  up of  the  Partnership or  which  will result  in the
dissolution of the Partnership."

                  (vii) "Unpaid  Preference Amount:    The  aggregate cumulative
amount required to  be distributed  with respect  to the Class C  Units for  the
current and all prior years less  any distributions previously made with respect
to the  Class C Units for  the current and  all prior years  pursuant to Section
20.3(a).

            B.    Article I is hereby amended by deleting the definition of  the
terms "Riley Ridge Partner," "Riley Ridge Unit" and "Unit."

            C.    The Partnership  Agreement is  hereby amended  by deleting the
term "Unit" (but not "Partnership Unit," "Class B Subordinated Unit" or "Class B
Subordinated Units") and replacing it with the  term "Class A Unit" wherever  it
appears.

            D.    The  Partnership  Agreement  is  hereby  amended  by  deleting
references to the terms  "Riley Ridge Partner" and  "Riley Ridge Unit"  wherever
they appear.

            E.    Section 4.7  is hereby amended by  deleting clause (d) thereof
in its entirety and substituting the following in lieu thereof:

            "(d)  A Capital Account shall be separately maintained for each unit
and  no Capital  Account shall be  attributable to any Class  C Unit immediately
after its  issuance.   Generally, a transferee  of a  Partnership Interest shall
succeed  to the  Capital Account  attributable to  the transferred  interest and
there  shall be  no  adjustment to  the  Capital Accounts  as a  result  of such
transfer.  If a transfer causes a  termination of the Partnership under  Section
708(b)(1)(B) of  the Code, the Partnership  Assets shall be  deemed to have been
distributed  in liquidation  of the  Partnership to  the Partners  and Assignees
(including the transferee of the Partnership Interest) pursuant to Sections 15.3
and 15.4 and recontributed by such  Partners and Assignees in  reconstitution of
the Partnership.   The Capital Accounts of such reconstituted  Partnership shall
be maintained in accordance with the principles of this Section 4.7."

            F.    Section 5.1 is  hereby amended by deleting it in  its entirety
and substituting the following in lieu thereof:

      "5.1  Income and Loss.

            (a)   For  purposes  of  maintaining  the  Capital  Accounts and  in
determining the rights of the Partners and Assignees among themselves and except
as provided in  Section 5.1(b) with  respect to items  of income, gain  loss and
deduction attributable to Terminating Capital Transactions and the provisions of
Sections 5.1(c) through (i), 1% of each item of income, gain, loss and deduction
(computed in  accordance with Section  4.7(b) but subject to  adjustment for any
allocations required by Sections 5.1(c)  through (i)) shall be  allocated to the
General Partner  with the remaining items  of income,  gain, loss and  deduction
allocated among the Limited Partners and Assignees as follows:

                  (i)  Each remaining  item of income or gain shall be allocated
      among the Limited Partners  and Assignees as follows  and in the following
      order of priority:

                        (A)   First, to the Class C Units pro rata in accordance
      with their Percentage  Interests until the aggregate amount of  income and
      gain allocated  pursuant to  this  Section 5.1(a)(i)(A)  is equal  to  the
      aggregate  amount  of loss  or  deduction  allocated  pursuant  to Section
      5.1(a)(ii)(B);

                        (B)   Second,  to   the  Class  C   Units  pro  rata  in
      accordance with  their Percentage Interests until  the aggregate amount of
      income and gain  allocated during  the current  year and  all prior  years
      pursuant  to  this   Section  5.1(a)(i)(B)  (including  any  gross  income
      allocations  under  Section  5.1(h)) is  equal  to  the  aggregate  amount
      required  to be distributed with respect  to the Class C  Units during the
      current  year and all prior  years pursuant to Section 20.3(a) (whether or
      not actually distributed); and

                        (C)   Thereafter,  to  the  Class A  Units  and  Class B
      Subordinated Units pro rata in accordance with their Percentage Interests.

                  (ii)  Each  remaining  item  of  loss  or  deduction shall  be
      allocated among the Limited  Partners and Assignees as  follows and in the
      following order of priority:

                        (A)   First,  to   the  Class   A  Units   and  Class  B
Subordinated Units pro rata in accordance with their Percentage Interests to the
least extent  necessary so  as to reduce  the positive  Adjusted Capital Account
balance of each such unit to zero;

                        (B)   Second,  to   the  Class  C   Units  pro  rata  in
accordance with their Percentage  Interests to the least extent necessary so  as
to reduce  the positive Adjusted Capital  Account balance of  each such  unit to
zero; and

                        (C)   Thereafter,  to  the  Class A  Units  and  Class B
Subordinated Units pro rata in accordance with their Percentage Interests.

            (b)   Notwithstanding anything in  the foregoing to the contrary, 1%
of each  item of income, gain,  loss or deduction  attributable to a Terminating
Capital Transaction shall be allocated to the General Partner with the remaining
items  of income,  gain,  loss  or deduction  attributable to  such  Terminating
Capital  Transaction allocated  among  the  Limited Partners  and  Assignees (as
determined after giving effect to all adjustments attributable to allocations of
items of  income, gain and loss  realized by the  Partnership during  the fiscal
year in question pursuant to the  provisions Section 5.1(a) and  any adjustments
attributable to  contributions and distributions of  money and property effected
prior to  such Terminating  Capital Transaction pursuant to  this Agreement)  as
follows:

                  (i)   Each remaining  item of income or gain attributable to a
Terminating Capital  Transaction shall  be allocated among  the Limited Partners
and Assignees as follows and in the following order of priority:

                        (A)   First, to the Class C Units pro rata in accordance
with  their Percentage Interests  until the positive Capital  Account balance of
each Class C Unit is equal  to the Unpaid Preference Amount attributable to that
unit;

                        (B)   Second, to the least extent necessary to cause the
Excess  Capital Account of the units to be in the same proportion to one another
as their Percentage Interests; and

                        (C)   Thereafter,  among  the  Class  A  Units,  Class B
Subordinated  Units  and  Class  C  Units  pro  rata  in  accordance with  their
Percentage Interests.

                  (ii)  Each remaining item of loss or deduction attributable to
a Terminating Capital Transaction shall be allocated among the Limited  Partners
and Assignees as follows and in the following order of priority:

                        (A)   First, to the  least extent necessary to cause the
Excess Capital Account of the units to  be in the same proportion to one another
as their Percentage Interests;

                        (B)   Second, to  the units pro  rata in accordance with
their Percentage Interests  to the least  extent necessary to reduce  the Excess
Capital Account of each unit to zero;

                        (C)   Third, to the Class C Units pro rata in accordance
with their  Percentage Interests  to the  least extent  necessary to reduce  the
positive Capital Account balance of each such unit to zero; and

                        (D)   Thereafter,  to  the Class  A  Units  and  Class B
Subordinated Units pro rata in accordance with their Percentage Interests.

            (c)   The  General  Partner  may,  for   any  fiscal  year  of   the
Partnership, make such  other or additional allocations as it  deems appropriate
to (i)  cause the  allocations of  Partnership book  income, gains,  losses  and
deductions to comply  with the requirements of  section 704 of the Code  or (ii)
achieve and maintain the uniformity of the intrinsic tax characteristics of  all
units, so long  as such allocations do not adversely affect  in any material way
the interests  of the holders of  the units in  current or future distributions.
The  General Partner  may  amend  this Agreement  to  the  extent  necessary  to
accomplish the purposes of this Section 5.1.

            (d)   Notwithstanding anything  in the provisions  of Section 5.1 to
the contrary,  to the extent that  a Partner's  Adjusted Capital  Account has  a
deficit  balance  or would  have a  deficit  balance  as a  result  of  any such
allocation  while  any other  Partner has  a  positive balance  in  its Adjusted
Capital   Account  (as  determined  after  giving   effect  to  all  adjustments
attributable  to allocations of  items of Partnership income,  gain, expense and
loss made  pursuant to  the preceding  provisions of this Section  5.1 for  such
year), such item of expense or loss  shall be allocated among the Partners whose
Adjusted Capital Account balances are positive (pro rata in accordance with such
positive  balances) to the extent necessary first to reduce the balances of such
other Partners' Adjusted Capital Accounts to zero, it being the intention of the
Partners that  no Partner's  Adjusted Capital Account balance  shall fall  below
zero while any other  Partner's Adjusted Capital Account has a positive balance.
In the  event that all of  the Partner's Adjusted  Capital Account  balances are
reduced to  zero, all further expenses  and losses shall  be allocated solely to
the  General  Partner.    Notwithstanding anything  in  this  Agreement  to  the
contrary, each  Partner  who has  been allocated  an  item  of expense  or  loss
pursuant  to  this  Section  5.1(d)  shall  be  specially  allocated  items   of
Partnership income and gain in an amount  equal to such items of expense or loss
as quickly as possible.

            (e)   Pursuant  to  section  1.704-1(b)(2)(ii)(d)  of  the  Treasury
Regulations  (relating to  "qualified income  offsets"), Partnership  income and
gain shall  be allocated, before  any other  allocation is made  pursuant to the
provisions of  Section 5.1(a) for  such year,  among the  Partners with  deficit
balances  in their  Adjusted  Capital Accounts  in the  amounts  and the  manner
sufficient to  eliminate  such deficit  balances  as quickly  as possible.    
An allocation under this  Section 5.1(e) shall be made only if and to the extent
that a Partner or Assignee  would have an Adjusted Capital Account deficit after
all other allocations provided  for in  this Section 5.1  have been  tentatively
made as if this Section 5.1(e) were not in the Agreement.

            (f)   All nonrecourse  deductions as  determined under  the Treasury
Regulations shall  be allocated among  the Partners pro rata  in accordance with
their  respective  Percentage  Interests  (excluding   any  Percentage  Interest
attributable to the Class C Units).

            (g)   The allocations set forth in Sections 5.1(d), (e) and (f) (the
"Regulatory Allocations") are  intended to comply with  certain requirements  of
Treasury Regulation sections 1.701-1(b) and 1.704-2.  The Regulatory Allocations
may effect results which  would not be consistent  with the manner in which  the
Partners intend to divide  Partnership distributions.  Accordingly,  the General
Partner  is authorized  to divide  other allocations of  income, gain,  loss and
deduction among  the Partners so as  to prevent the Regulatory  Allocations from
distorting the manner in which Partnership distributions would be divided  among
the Partners under Article XV  of this Agreement.   In general, the reallocation
will be accomplished by specially allocating  other items of income,  gain, loss
and  deduction, to  the extent  they exist, among the  Partners so  that the net
amount of the Regulatory Allocations and the special allocations to each Partner
is zero.  The General Partner will have discretion  to accomplish this result in
any reasonable  manner that is consistent  with section 704 of the  Code and the
related Treasury Regulations.

            (h)   If  at   any  time   the  allocation   provisions  of  Section
5.1(a)(i)(B) do not result in the allocation of items of income or gain at least
equal to the  aggregate distributions actually made with  respect to the Class C
Units during the current year  and all prior years pursuant to Section 20.3, the
Limited  Partners  and  Assignees  holding Class  C  Units  shall  be  specially
allocated  items  of gross  income  or  gain of  the  Partnership,  pro  rata in
accordance with their Percentage Interests attributable to their Class C  Units,
such  that  the aggregate  amount  of income  and  gain allocated  under Section
5.1(a)(i)(B)  and  this Section  5.1(h)  is  equal to  the  aggregate  amount of
distributions actually made with respect to the Class C Units during the current
year and all prior years  pursuant to Section 20.3.  All allocations  made under
this section 5.1(h) shall be considered as made pursuant to Section 5.1(a)(i)(B)
for all purposes of this Agreement.

            (i)   If at any time the  allocation provisions of this Article V do
not result in  the allocation to the General  Partner of at least 1% of  each of
the  Partnership's material items  of income, gain, loss,  deduction, or credit,
the General Partner  shall be allocated so much more  of each of those  items as
will cause  the General Partner to be allocated at all times 1% of each of those
items.  However, the 1% standard shall not take  precedence over the allocations
required by section 704(c) of the Code or the provisions of Section 5.2(e).

            (j)   For  purposes of allocating the excess nonrecourse liabilities
of the Partnership under Treasury Regulation section 1.752-3(a)(3), the Partners
agree that each Partner's Percentage Interest (excluding any Percentage Interest
attributable to the Class C Units) shall be treated  as such Partner's "interest
in  partnership  profits" for  purposes  of Treasury  Regulation section  1.752-
3(a)(3)."

            G.    Section 5.2 is hereby amended  by deleting clause (a)  thereof
in its entirety and substituting the following in lieu thereof:

            "(a)  For federal income  tax purposes, except as otherwise provided
herein  or required by section 704(c) of the Code or Treasury Regulation section
1.704-1(b)(2)(iv)(f),  each  item   of  amount  realized,  income,  gain,  loss,
deduction and  credit of the  Partnership shall be allocated  among the Partners
and  Assignees in the same manner as each correlative item of income, gain, loss
or deduction (computed in accordance with Section 4.7(b)) is allocated  pursuant
to Section 5.1.  The General Partner may use any method permitted under the Code
for purposes  of making allocations required  by section 704(c)  of the  Code or
Treasury Regulation section 1.704-1(b)(2)(iv)(f)."

            H.    Section  5.2(b) is  hereby  amended by  adding clause  (iv) as
follows:

      "(iv) Notwithstanding anything in this Section 5.2(b) to the  contrary, no
Adjusted Basis allocable  under this  Section 5.2(b) shall  be allocated  to any
Partner  or Assignee  with respect  to the  Class C Units  held by  such person,
unless the  General Partner  determines  that another  method of  allocation  is
required by the Code or applicable Treasury Regulations."

            I.    Section 5.2 is hereby  further amended by deleting clause  (k)
thereof in its entirety.

            J.    Section 5.4 is hereby amended by deleting the  fourth sentence
thereof in its entirety and substituting the following in lieu thereof:

            "Except  as provided in  Article XVIII, Article XIX  and Article XX,
all distributions  shall be made  concurrently to  all Partners  who are  Record
Holders  on the  Record Date  set for purposes of  such distribution  and to the
General Partner in accordance with the Percentage Interests of such Partners  as
of the Record Date.

            K.    Section  16.1 is  hereby amended  by deleting  clause (f)(iii)
thereof in its entirety and substituting the following in lieu thereof:

                  "(iii)  necessary  or desirable  in  order  to  facilitate the
trading  of  the Class A  Units  or  Class  C Units  or  comply with  any  rule,
regulation, guideline  or requirement  of any securities exchange  on which  the
Class  A Units or  Class C Units are  or will be listed  for trading, compliance
with  any of which the General Partner deems to be  in the best interests of the
Partnership and the Limited Partners."

            L.    The  Partnership  Agreement  is  hereby  amended  by  deleting
Article XVIII in its entirety.

            M.    The Partnership Agreement is hereby amended by inserting a new
Article XX in  the appropriate place to  read in its entirety  as follows and by
renumbering the remaining sections of the Partnership Agreement:

                                   "ARTICLE XX

                                  CLASS C UNITS

      20.1  Definitions.  "Class  C Units" shall mean that class  of Partnership
Units described in this Article XX.

      20.2  Designation  of Class.   A class of Partnership  Units is designated
the "Class C Units"  of the  Partnership.  Such  class shall be  deemed for  all
purposes to  be issued  pursuant  to Section  4.2(a).   Class  C Units  will  be
transferable in accordance with the terms of this Agreement  and will be subject
to redemption as provided in Section 11.6.  The Class C Units  will share in the
Partnership's  allocations and  distributions  as  set forth  in Article  V  and
Section 20.3.

      20.3  Distribution Rights.

            (a)   Notwithstanding anything  in this Agreement  to the  contrary,
subject to  the prior rights  of the holders of  senior securities, if  any, the
holders of the Class C Units, in  preference to the holders of the Class A Units
and Class B  Subordinated Units, shall be  entitled to receive,  when, as and if
declared by  the General  Partner,  cumulative cash  distributions at,  but  not
exceeding, the rate  of $1.00 per Class  C Unit per annum,  payable quarterly to
holders of record  of the Class C Units  on March 31, June 30, September  30 and
December 31 in  each year, beginning March 31,  1996.  Such distributions  shall
accrue and be cumulative from March 31, 1996.

            (b)   So long  as any  Class C Units shall  remain outstanding,  the
Partnership may not declare or make any cash distributions on  the Class A Units
or Class B Subordinated Units unless all accrued and unpaid distributions on the
Class  C Units have been  paid or declared and  duly provided for.  This section
shall not prohibit  or restrict  the purchase, acquisition  or redemption  of or
other  transaction affecting the  Class A Units and  Class B Subordinated Units,
regardless whether accrued distributions have been paid on the Class C Units.

      20.4  Voting Rights.  The Class C  Units shall vote as a separate class on
all matters required or otherwise brought for a vote of the Partnership.

      20.5  Provisions Controlling.   To the extent that the provisions  of this
Article XX  conflict with any other provisions of the  Agreement, the provisions
of this Article XX shall control."

      3.    Ratification.  Except  as specified hereinabove, all  other terms of
the Partnership  Agreement shall  remain unchanged and are  hereby ratified  and
confirmed.   All references to "this Agreement" or  "the Agreement" appearing in
the  Partnership  Agreement,  and all  references  to the  Partnership Agreement
appearing  in any other document or  instrument shall be deemed  to refer to the
Partnership Agreement as amended by this Amendment.

      IN WITNESS WHEREOF, this Amendment has been  duly executed by the  General
Partner on this the 7th day of December, 1995.


                                    GENERAL PARTNER

                                    HALLWOOD ENERGY CORPORATION



                                    By:/s/Cathleen M. Osborn
                                      ------------------------------
                                       Cathleen M. Osborn

                                    Title: Vice President


                                    Attest:/s/Diane M. Blieszner
                                           -------------------------
                                           Diane M. Blieszner

                                    Title: Assistant Secretary<PAGE>