THE HALLWOOD GROUP INCORPORATED


                         FINANCIAL CONSULTING AGREEMENT


     THIS  FINANCIAL CONSULTING  AGREEMENT (the  "Agreement"), made  and entered
into as  of the  30th  day of  June, 1994,  by and  between  THE HALLWOOD  GROUP
INCORPORATED, a Delaware corporation  (the "Consultant") and HALLWOOD PETROLEUM,
INC., a Delaware corporation ("HPI").

                              W I T N E S S E T H:

     WHEREAS,  HPI,  on  behalf  of  its  affiliates,  is  engaged  in  numerous
international  activities  and shall  from time  to  time require  the financial
knowledge and expertise  of the Consultant  or its agents  in regard to  various
transactions between  HALLWOOD ENERGY CORPORATION, a  Texas corporation ("HEC"),
HALLWOOD   ENERGY  PARTNERS,   L.P.,   a  Delaware   limited  partnership   (the
"Partnership"),   HALLWOOD  CONSOLIDATED   RESOURCES  CORPORATION,   a  Delaware
corporation ("HCRC"), or  their affiliates, and any third parties (HPI, HEC, HEP
and  HCRC and  their  affiliated  entities are  sometimes  referred  to in  this
Agreement as the "Energy Companies");

     WHEREAS, the  Energy Companies  desire to draw  upon and  benefit from  the
financial knowledge and  expertise of  Consultant or its  agents and  Consultant
desires to consult with the Energy Companies and be available therefor.

     NOW, THEREFORE, for  and in  consideration of the  mutual undertakings  and
agreements  contained  in  this  Agreement  and  for  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

     Section 1.  Appointment.  HPI hereby appoints and employs the Consultant to
act as its  financial advisor and consultant upon  and subject to the  terms and
conditions hereinafter set forth, and Consultant hereby accepts such appointment
and undertakes to advise and consult with HPI during  the term of this Agreement
upon and subject to the terms and conditions hereinafter set forth.

     Section 2.   Term.   The services  of the Consultant  under this  Agreement
shall be for a  term commencing on the date  of execution of this  Agreement and
expiring  June 30, 1997 (the "Expiration Date") unless earlier terminated by the
Consultant for any reason upon thirty (30) days' written notice to HPI.

     Section 3.   Duties of  the Consultant.   The Consultant shall  furnish and
perform international consulting and advisory  services to the Energy  Companies
to  enable such  entities to:   (i) render  assistance in  the implementation of
plans   of  financial   restructuring  of   unrelated  companies;   (ii)  effect
acquisitions  by the Energy Companies of oil  or gas interests or mergers of the
Energy Companies  with other  entities; and  (iii) assist  and consult  with the
Energy Companies  in structuring and  obtaining financing for  their activities,
and  shall  perform such  services in  or from  Monaco,  Antigua, or  such other
jurisdictions  as Consultant or its  agents may, in  their sole discretion, deem
appropriate,  and neither Consultant nor  any agent of  Consultant shall provide
any such services, or otherwise engage in any business of any nature whatsoever,
in the United  States or the  United Kingdom.   In particular, the  Consultant's
duties  and obligations hereunder shall  include: (a) performing  such duties at
such times and  in such manner  as shall be  mutually agreeable  to HPI and  the
Consultant, although  at all times the  Consultant will retain  control over how
such services  are performed and  who the Consultant  will hire to  perform such
services;  (b)  reporting to  HPI and  any other  entity  designated by  HPI, as
needed,  to fulfill  its obligations  regarding the  rendition  of international
financial  and consulting  advice;  and (c)  observing  and complying  with  all
resolutions, regulations and directions from  time to time made or given  by HPI
as long as  such resolutions, regulations and  directions do not  interfere with
the manner in which Consultant performs its duties.

     Section 4.  Compensation.

     A.   As  compensation for the Consultant's  services, HPI agrees  to pay to
the Consultant  a total  of Nine  Hundred Thousand  Dollars ($900,000), due  and
payable in Three Hundred  Thousand Dollar ($300,000) installments on  June 30 of
each of 1994, 1995 and 1996.

     B.   The amounts  paid pursuant to paragraph  A of this section  shall be a
nonrefundable advance against any fees, commissions or other payments payable to
Consultant in the future for services  rendered by Consultant in connection with
any transactions between the Energy Companies and any third party.

     C.   HPI and the Consultant  hereby acknowledge and agree that  all amounts
payable pursuant to paragraph A of this section are to be paid as a  retainer to
secure,  for  the  benefit of  the  Energy  Companies, the  availability  of the
Consultant  to perform the services referred to  in Section 3 of this Agreement.
Consequently,  all amounts  so  payable shall  be  so payable,  without  offset,
withholding  or  any deduction  of  any nature  whatsoever,  whether or  not any
services are  performed at any time,  except as provided in paragraph  B of this
section.

     D.   HPI shall reimburse Consultant for all reasonable and ordinary out-of-
pocket  business expenses Consultant reasonably incurs in the performance of its
duties under this Agreement.

     Section 5.  Relationship of the  Parties.  In performing its services under
this  Agreement, the  Consultant  shall be  an  independent contractor  and,  as
between  HPI  and the  Consultant,  neither  HPI nor  any  other  of the  Energy
Companies  shall be responsible for withholding, collection or payment of income
taxes or for other  taxes of any nature on behalf of the Consultant or any agent
of Consultant.   Nothing contained in this  Agreement shall make  the Consultant
the  agent, employee,  joint  venturer or  partner of  the  Energy Companies  or
provide the  Consultant with the power or authority to bind the Energy Companies
to  any contract, agreement or arrangement  with any individual or entity except
with the prior written approval of such entities.

     Section 6.   Confidentiality.  The  Consultant recognizes and  acknowledges
that confidential  information of various  kinds may  exist, from time  to time,
with  respect  to  the  business of  the  Energy  Companies.    Accordingly, the
Consultant  covenants on  behalf of  itself and  its agents,  if any,  that, (a)
except with the  prior written  consent of  HEC, they  shall at  all times  keep
confidential and not divulge, furnish or make accessible to anyone (except HEC's
or the Partnership's  authorized representatives), any  confidential information
to which the Consultant or its agents  have been or shall become privy  relating
to the  business of HEC,  the Partnership  or any of  their affiliates  and, (b)
except with  the prior  written consent of  HCRC, they shall  at all  times keep
confidential  and  not divulge,  furnish or  make  accessible to  anyone (except
HCRC's authorized  representatives), any  confidential information to  which the
Consultant  or  its agents  have  been or  shall  become privy  relating  to the
business of HCRC  or any of  its affiliates.  The  provisions of this  Section 6
shall not apply  to any  information to  the extent (i)  it is  or shall  become
generally known to the public or the trade (without the commission of a tortious
act), (ii) it  is or shall become  available in trade or other  publications, or
(iii) Consultant  or its agents are required by law to disclose such information
to any person.

     Section 7.     Certain Payments.   The  Consultant acknowledges that  it is
aware  of the  provision of United  States law  relating to  prohibitions of any
person representing a United States company from, directly or indirectly, giving
anything of value to any  foreign official to influence the foreign  official in
directing or agreeing to  do business with the United States firm.  In addition,
the Consultant acknowledges that it has  read the Statement of Company Policy of
the Hallwood Entities regarding  payment of gifts to foreign  officials that has
previously been supplied to the Consultant.  The Consultant hereby undertakes to
abide by  such laws and  policy and will  not use any  part of the  amounts paid
under  this Agreement  or any payments  that are  prohibited under  such laws or
policy.

     Section 8.  Assignment.  Neither party hereto may assign, without the other
party's  prior written  consent,  this Agreement,  or  any right  or  obligation
hereunder, and any and all assignments without such  prior written consent shall
be  null and  void, except  that  with the  consent  of HPI  the Consultant  may
designate agents to perform its obligations under this Agreement.

     Section 9.  Miscellaneous.

     A.   Governing Law.  This Agreement shall be governed by,  and construed in
accordance with, the  laws of the  State of Texas,  other than the conflicts  of
laws provisions of such laws. 

     B.   Headings.  The descriptive  headings for the several sections  of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

     C.   Severability.  In case any one  or more of the provisions contained in
this  Agreement  shall for  any  reason  be  held  to  be  invalid,  illegal  or
unenforceable in  any respect,  such invalidity, illegality  or unenforceability
shall  not affect  any  other provision  hereof,  and  this Agreement  shall  be
construed as if such invalid, illegal or unenforceable provision had never  been
contained in this Agreement.

     D.   Entire  Contract.    This  Agreement  supersedes  any  and  all  other
agreements, either oral or in  writing, between the parties hereto and  contains
all of  the covenants and agreements  between the parties.   In particular, this
Agreement  supersedes the  Financial  Consulting Agreement  between the  parties
dated June 30, 1993, which Agreement is no longer in effect.

     E.   Amendments.   This Agreement  may not be  modified, altered,  amended,
waived or terminated orally, unless in writing signed by the parties hereto.

     F.   Notices.   All communications  to be  given or made  pursuant to  this
Agreement shall be  in writing and shall  be deemed to  have been duly given  or
made if  mailed by registered or  certified mail, postage prepaid,  addressed to
the address  set  forth opposite  each  party's name  below,  or in  such  other
reasonable manner  as HPI  or the  Consultant, as  the case may  be, shall  have
previously designated in writing to the other.

     G.   Execution  in  Counterparts.    This  Agreement  may  be  executed  in
counterparts,  each  to constitute  an original,  but both  in the  aggregate to
constitute one agreement as executed.


     IN WITNESS WHEREOF,  the parties  hereto have duly  executed and  delivered
this Agreement as of the date first above written.

                                   CONSULTANT:

Address:                           THE HALLWOOD GROUP INCORPORATED
3710 Rawlins
Suite 1500
Dallas, Texas 75219                By:  /s/William L. Guzzetti
                                       --------------------------
                                   Name:  William L. Guzzetti
                                   Title: Executive Vice President


                                   HPI:

Address:                           HALLWOOD PETROLEUM, INC.
4582 S. Ulster Street Parkway<PAGE>
Suite 1700
Denver, Colorado 80237             By:  /s/Russell P. Meduna
                                      ---------------------------
                                   Name:  Russell P. Meduna
                                   Title: Executive Vice President<PAGE>