UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   Form 10-K/A

                   Amended March 28, 2001 to Restate Part III

MARK ONE

[X]    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

                   For the Fiscal Year Ended December 31, 2000

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                          Commission File Number 0-9579



                           HALLWOOD ENERGY CORPORATION
             (Exact name of registrant as specified in its charter)


              Delaware                                                84-1489099
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                            Identification Number)

      4610 South Ulster Street
             Suite 200
            Denver, Colorado                                               80237
(Address of principal executive offices)                              (Zip Code)

       Registrant's telephone number, including area code: (303) 850-7373

           Securities Registered Pursuant to Section 12(b) of the Act:

                                                           Name of each exchange
Title of each class                                          on which registered

        None                                                         None

           Securities Registered Pursuant to Section 12(g) of the Act:

                        Common Stock, par value $.01 per share
         Series A Cumulative Preferred Stock, par value $.01 per share

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [x] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market value of the common shares held by  nonaffiliates  of the
registrant as of March 1, 2001 was approximately $77,378,000.

Number of Shares outstanding as of March 1, 2001:
                                    Common Stock 9,659,239
                                    Series A Cumulative Preferred Stock2,263,573


                                   PART III

ITEM 10 -    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors, Officers and Key Employees

The following sets forth certain biographical information concerning each of the
Company's Directors and its executive officers.

Anthony J.  Gumbiner,  56, has served as a Director of the Company since June 8,
1999. He has also served as Chairman of the Board of Directors of Hallwood Group
since 1981 and as Chief Executive Officer of Hallwood Group since April 1984. He
was Chairman of the Board and Chief Executive  Officer of the general partner of
Hallwood  Energy  Partners,  L.P.  ("HEP")  from 1984 until  June  1999.  He was
Chairman  of the Board and Chief  Executive  Officer  of  Hallwood  Consolidated
Resources Corporation ("HCRC") from February 1992 to June 1999. Mr. Gumbiner has
also served as Chairman of the Board of Directors  and as a director of Hallwood
Holdings S.A., a Luxembourg real estate investment company, since March 1984. He
has been a director of Hallwood Realty since November 1990. He is a Solicitor of
the Supreme Court of Judicature of England.

John R. Isaac,  Jr.,  56, has served as a Director of the Company  since June 8,
1999.  From June 1992 until June 1999,  Mr. Isaac was a director of HCRC.  Since
June 1,  1999,  Mr.  Isaac has been  President  and Chief  Executive  Officer of
99(cent)Stuff,  LLC, a chain of retail variety  stores.  Since October 1997, Mr.
Isaac has been Chief  Executive  Officer and President of Ideas,  Inc., a retail
consulting company.  From February 1996 to October 1997, Mr. Isaac was President
and Chief Executive  Officer of Thorn Americas,  Inc.,  parent of  Rent-A-Center
USA.  From March 1995 until  February  1996,  Mr. Isaac was  President and Chief
Operating Officer of Rent-A-Center USA. From February 1991 to February 1995, Mr.
Isaac was President and Chief  Operating  Officer of  Everything's  A Dollar,  a
division of Value Merchants,  Inc. He was President and Chief Executive  Officer
of Hallwood  Industries  Incorporated  from August 1987 to October  1991. He was
President of Tradevest,  Inc., a mail order catalog retailer, from 1986 to 1987,
and a Vice  President  of Service  Merchandise  Co.,  Inc.,  a catalog  showroom
retailer, from 1981 to 1986.

Rex A. Sebastian,  71, has been a Director of the Company since June 8, 1999. He
was a director of the general partner of HEP from March 1997 until June 1999. He
served as Senior Vice  President-Operations  of Dresser  Industries,  Inc.  from
January 1975 until his  retirement in July 1985. He joined  Dresser in 1966. Mr.
Sebastian is now a private investor.

William L.  Guzzetti,  57, has been  President,  Chief  Operating  Officer and a
Director of the  Company  since  December  14,  1998.  He was  President,  Chief
Operating  Officer and a director of the general  partner of HEP from 1985 until
June 1999. He was President, Chief Operating Officer and a director of HCRC from
May 1991 until June 1999.  Mr.  Guzzetti is also an Executive  Vice President of
The Hallwood  Group  Incorporated  ("Hallwood  Group") and in that  capacity may
devote a portion of his time to the activities of Hallwood Group,  including the
management  of real  estate  investments,  acquisitions  and  restructurings  of
entities  controlled  by  Hallwood  Group.  He is a director  and  President  of
Hallwood Realty Corporation ("Hallwood Realty"), which is the general partner of
Hallwood Realty Partners, L.P., and in that capacity may devote a portion of his
time to the activities of Hallwood Realty. He is a member of The Florida Bar and
the State Bar of Texas.

Nathan C. Collins, 66, has been a Director of the Company since June 8, 1999. He
was a director  of the  general  partner of HEP from March 1997 until June 1999.
Since February 2001, Mr. Collins has been President, Chief Operating Officer and
a director of Bank of the Southwest.  From June 1999 until November 2000, he was
President of Nordstrom fsb and remains on its Board of Directors.  From February
1999 until June 1999, he was a consultant in banking  products  development  for
Nordstrom,  Inc. He is also a director of First  State Bank of  Flagstaff.  From
March 1, 1995 until March 1, 1996, he was President, Chief Executive Officer and
a director of Flemington  National Bank & Trust in Flemington,  New Jersey. From
November  1987 until  December  1994, he was chairman of the board of directors,
President  and Chief  Executive  Officer of  BancTexas  Group Inc.  He began his
banking career in August 1964 with the Valley National Bank in Phoenix,  Arizona
and held various  positions there,  finally  becoming  Executive Vice President,
Senior Credit Officer and Manger of Asset/Liability Group of the bank.

Jerry A.  Lubliner,  46, has served as a Director of the  Company  since June 8,
1999.  From June 1992 until June 1999, Dr.  Lubliner was a director of HCRC. Dr.
Lubliner is an orthopaedic  surgeon who has been in private practice since 1986.
From 1986 to 1988,  he was Associate  Chief-Sports  Medicine at the Hospital for
Joint  Diseases--Orthopaedic  Institute in New York. Dr. Lubliner is a Fellow of
the American Academy of Orthopaedic  Surgeons. He is also a medical director for
the Healthsouth Corporation.

Bill M. Van Meter,  68, has served as a Director  of the  Company  since June 8,
1999. From September 1996 until June 1999, Mr. Van Meter was a director of HCRC.
From 1986 until May 1996, Mr. Van Meter was President of the Energy Companies of
ONEOK  division of ONEOK Inc.  From 1958 to 1996,  Mr. Van Meter was employed by
both  major  and  independent  oil  companies.  Mr.  Van  Meter is now a private
investor.

Hamilton P. Schrauff,  65, has served as a Director of the Company since June 8,
1999.  Since August 2000, Mr. Schrauff has been Chief  Financial  Officer of the
Omni Group.  From September 1996 until June 1999, Mr. Schrauff was a director of
HCRC.  From April 1999 until June 2000, Mr.  Schrauff was a partner in Tatum CFO
Partners,  LLP. From July 1998 until March 1999, he was an independent financial
consultant.  From March 1997 until June 1998, he was Chief Financial  Officer of
Burns Controls  Company.  From March 1996 to January 1997, he was Vice President
of Capital  Alliance.  From August 1995 to February  1996, he was an independent
financial  consultant.  From October 1991 to August 1995, he was Vice  President
and Chief  Financial  Officer of Basic Capital  Management,  Inc.,  Syntek Asset
Management,  Inc.,  American Realty Trust Investors,  Inc.,  Income  Opportunity
Realty Trust and  Transcontinental  Realty Investors,  Inc. From October 1991 to
February 1994, he was Executive Vice  President and Chief  Financial  Officer of
National Income Realty Trust and Vinland  Property Trust.  From December 1990 to
October 1991, he was Vice President Finance-Partnership  Investments of Hallwood
Group.  From October 1980 to October  1990,  he was Vice  President  Finance and
Treasurer,  and from  November  1976 to September  1980,  he was Vice  President
Finance,  of Texas Oil and Gas  Corporation.  Mr. Schrauff is a Certified Public
Accountant  and  Certified  Financial  Planner.  He is a member of the  American
Institute of Certified Public Accountants, the Texas Society of Certified Public
Accountants and the Financial Executives Institute.

Hans-Peter Holinger,  58, has been a Director of the Company since June 8, 1999.
He was a director of the general partner of HEP from March 1997 until June 1999.
Mr. Holinger served as Managing  Director of Interallianz  Bank Zurich A.G. from
1977 until February 1993. Since February 1993, he has been the majority owner of
Holinger Asset Management AG, Zurich. Mr. Holinger is a citizen of Switzerland.

Russell P. Meduna,  46, has been  Executive  Vice President of the Company since
December  15,  1998.  Mr.  Meduna was  Executive  Vice  President of the general
partner  of HEP from  October  1989  until  June  1999.  He was  Executive  Vice
President  of HCRC from June 1992 until June 1999.  He has been  Executive  Vice
President of Hallwood Petroleum, Inc. ("Hallwood Petroleum") since October 1989.
Mr. Meduna was Vice  President of Hallwood  Petroleum from April 1989 to October
1989 and  Manager of  Operations  from  January  1989 to April  1989.  He joined
Hallwood  Petroleum in 1984 as  Production  Manager.  Prior to joining  Hallwood
Petroleum,  he was employed by both major and  independent  oil  companies.  Mr.
Meduna is a  registered  professional  engineer  in the States of  Colorado  and
Texas.

Cathleen M. Osborn,  48, has been Vice President,  Secretary and General Counsel
of the Company since December 15, 1998. She was Secretary and General Counsel of
HCRC from May 1992 until June 1999 and Vice  President from June 1992 until June
1999.  Ms.  Osborn was Vice  President,  Secretary  and  General  Counsel of the
general  partner of HEP from  September  1986 until June 1999. She has been Vice
President,  Secretary and General  Counsel of Hallwood  Petroleum  since October
1986. She joined Hallwood Petroleum in 1985 as senior staff attorney. Ms. Osborn
is a member of the Colorado State Bar.

William J. Baumgartner,  45, has been Vice President and Chief Financial Officer
of the Company and Hallwood  Petroleum  since November 22, 1999. From 1997 until
November  1999 Mr.  Baumgartner  was  Vice  President-Finance,  Chief  Financial
Officer   and  a  director   of  Miller   Exploration   Company.   He  was  Vice
President-Finance  and Chief Financial  Officer of Miller Oil  Corporation  from
1991 until 1997.  He joined  Miller Oil  Company in 1985.  Mr.  Baumgartner  was
employed  in  public  accounting  and  with  various  independent  oil  and  gas
exploration entities prior to joining Miller Oil Company.

George  Brinkworth,  59, has been Vice  President of  Exploration of the Company
since  December 15, 1998. He has been Vice  President of Exploration of Hallwood
Petroleum  since August 1994. He became  associated  with Hallwood  Petroleum in
1987  when he was  President  of a joint  venture  program  funded  by  Hallwood
Petroleum and two other  domestic oil  companies.  Mr.  Brinkworth  has 35 years
experience with various exploration and production companies, including previous
responsibility  for operations in the United  Kingdom,  Spain,  Morocco,  Egypt,
Indonesia,  Malaysia  and  Peru,  as  well  as in  the  United  States.  He is a
registered geophysicist in the State of California.

William H. Marble,  50, has been Vice  President of Business  Development of the
Company  since  December  15,  1998.  He has been  Vice  President  of  Hallwood
Petroleum  since December 1990. His previous  positions with Hallwood  Petroleum
have  included  Texas/Gulf  Coast  District  Manager,   Manager  of  Nonoperated
Properties and Chief Engineer. He joined a predecessor general partner of HEP in
1984.  Mr.  Marble is a  registered  engineer in the Sate of Colorado and has 27
years oil and gas engineering experience.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  officers,
directors and persons who own more than ten percent of the Company's  stock,  to
file reports of ownership and changes in ownership with the Securities  Exchange
Commission ("SEC"). Officers,  directors and greater than ten percent owners are
required by SEC  regulations  to furnish the Company  with copies of all Section
16(a) forms they file.

Based  solely on its  review of the  copies of such  forms  received  by it, the
Company  believes  that  each  of  its  officers,  directors  and  greater  than
ten-percent   owners  complied  with  all  Section  16(a)  filing   requirements
applicable to them during the year ended December 31, 2000,  except as set forth
in the following table. The following persons made late filings in 2000:

The Hallwood Group Incorporated   Form 4 for sale of preferred stock; filed late
Hans-Peter Holinger               Form 3 for receipt of options; filed late



<PAGE>


ITEM 11 - EXECUTIVE COMPENSATION

The following table sets forth the aggregate cash compensation paid for services
rendered during the 1998, 1999, and 2000 fiscal years by (i) the Company's Chief
Executive  Officer and (ii) the  Company's  four other most  highly  compensated
executive officers who were serving as executive officers at the end of the 2000
fiscal year (collectively,  the "Named Executive  Officers").  Amounts shown for
1998 and January 1, 1999 through June 8, 1999 were paid by HEP and HCRC.
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                                                   Long Term
                                                Annual Compensation               Compensation

                                                                            Securities
                                                                            Underlying
                                                                          Options/ SARs        LTIP              All Other
Name & Principal Position           Year       Salary         Bonus            (#)             Payouts         Compensation (1)
-------------------------           ----       ------         -----            ----            --------        -------------
<S>                                 <C>         <C>            <C>                 <C>         <C>                <C>
Anthony J. Gumbiner (2)             2000        $300,000       $497,100            71,300      $230,884                 0
Chief Executive Officer             1999        $168,333        $75,000           198,000       $66,208                 0
                                    1998               0              0               (3)           (4)                 0


William L. Guzzetti                 2000        $204,811       $591,100            42,200       $67,878             $5,100
President and Chief                 1999        $204,811       $171,000           117,000       $23,251             $4,800
Operating Officer                   1998        $204,811       $162,800               (3)       $30,523             $4,800

Russell P. Meduna                   2000        $163,664       $486,100            31,600       $67,878             $5,100
Executive Vice President            1999        $163,664        $88,000            88,500       $23,251             $5,375
                                    1998        $163,664        $99,000               (3)       $30,523             $4,800

Cathleen M. Osborn                  2000        $119,614       $328,700            22,200       $47,721             $5,672
Vice President and                  1999        $119,614        $47,000            61,500       $16,956             $4,800
General Counsel                     1998        $119,614        $74,500               (3)       $21,458             $4,800

William J. Baumgartner              2000        $129,135       $352,500            22,200       $12,396           $102,066
Vice President                      1999         $14,604        $10,000            61,500             0            $21,112

</TABLE>


(1)  Employer  contribution  to 401(k);  relocation  reimbursements  paid to Mr.
     Baumgartner  of $102,066  and $21,112 in 2000 and 1999,  respectively;  and
     service  awards  of $572  paid to Ms.  Osborn  in 2000 and $575 paid to Mr.
     Meduna in 1999.

(2)  The amount  shown in the table for 1999 is for the period from June 9, 1999
     through  December 31, 1999.  During 1998,  HEP and HCRC  participated  in a
     consulting agreement between Hallwood Petroleum and Hallwood Group pursuant
     to which  Hallwood  Group  received  a fee of  $550,000  for each year from
     affiliates  of Hallwood  Petroleum.  A fee of  $241,388  was paid under the
     agreement  for the  period  January  1,  1999  through  June 8,  1999.  The
     consulting  services  were  provided  by HSC  Financial  Corporation  ("HSC
     Financial"),  through the services of Mr. Gumbiner and a former director of
     the  Company,  and  Hallwood  Group paid the annual fee it  received to HSC
     Financial.

(3)  Consists of the  following  options to acquire HEP Class C units granted in
     1998. These options have terminated.



                                                          Securities Underlying
          Name                                                Options/SARs (#)
          ----                                                ----------------
      Anthony J. Gumbiner                                           34,588
      William L. Guzzetti                                           16,588
      Russell P. Meduna                                             14,188
      Cathleen M. Osborn                                            10,024

(4)   Payments were made to HSC Financial Corporation, with which Mr. Gumbiner
      is associated, in the amount of $67,977 for 1998.

The  following  table sets forth  information  with respect to all stock options
granted in fiscal 2000 to the Named Executive Officers.
<TABLE>
<CAPTION>

                                                   Option/SAR Grants in Last Fiscal Year
                                                                                                  Potential Realized Value at
                                                                                                 Assumed Annual Rates of Stock
                                                                                                Price Appreciation for Option
                                Individual Grants                                                           Term (2)
                                -----------------                                                           -----
                                   Number of         % of Total
                                  Securities        Options/SARs
                                  Underlying           Granted      Exercise or                      5%              10%
                                 Options/SARs       Employees in    Base Price     Expiration       $6.51           $9.01
Name                              Granted (1)        Fiscal Year     ($/Share)        Date       Share Price     Share Price
----                              --------           -----------     ---------        ----       -----------     -----------

<S>                                       <C>            <C>          <C>           <C>              <C>               <C>
Anthony J. Gumbiner                       71,300         30           4.625         1/28/07          $134,247          $312,851
William L. Guzzetti                       42,200         18           4.625         1/28/07           $79,456          $185,166
Russell P. Meduna                         31,600         13           4.625         1/28/07           $59,498          $138,655
Cathleen M. Osborn                        22,200          9           4.625         1/28/07           $41,799           $97,410
William J. Baumgartner                    22,200          9           4.625         1/28/07           $41,799           $97,410
</TABLE>

(1)  Options have a seven-year  term and vest  cumulatively  over three years at
     the  rate  of 1/3  on  each  of  the  date  of  grant  and  the  first  two
     anniversaries  of the grant date. All options vest immediately in the event
     of certain changes in control of the Company.

(2)  Securities and Exchange  Commission Rules require  calculation of potential
     realizable  value  assuming  that  the  market  price of the  Common  Stock
     appreciates  in value at 5% and 10%  annualized  rates.  At a 5% annualized
     rate of  appreciation,  the Common Stock price would be $6.51 at the end of
     seven years.  At a 10% annualized  rate of  appreciation,  the Common Stock
     price  would be $9.01 at the end of seven  years.  No gain to an  executive
     officer is possible  without an appreciation  in Common Stock value,  which
     will  benefit all holders of Common  Stock.  The actual  value an executive
     officer  may receive  depends on market  prices for the Common  Stock,  and
     there can be no  assurance  that the  amounts  reflected  will  actually be
     realized.

No options were  exercised by executive  officers in 2000.  The following  table
sets forth the value of options held by the  executive  officers at December 31,
2000.


<PAGE>


Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values

<TABLE>
<CAPTION>

                                 Number of Securities Underlying           Value of Unexercised
            Unexercised Options/SARs at In-the-Money Options/SARs at
                                            FY-End (#)                          FY-End ($)
Name                              Exercisable/Unexercisable (1)        Exercisable/Unexercisable (2)
----                              --------------------------           ---------------------------
<S>                                       <C>                                 <C>
Anthony J. Gumbiner                       23,767/47,533                       115,864/231,723
William L. Guzzetti                       14,067/28,133                       67,577/137,148
Russell P. Meduna                         10,534/21,066                       51,353/102,697
William J. Baumgartner                     7,400/14,800                        36,075/72,150
Cathleen M. Osborn                         7,400/14,800                        36,075/72,150
</TABLE>


(1)  Options have a seven-year  term and vest  cumulatively  over three years at
     the  rate  of 1/3  on  each  of  the  date  of  grant  and  the  first  two
     anniversaries  of the grant date. All options vest immediately in the event
     of certain changes in control of the Company.

(2)  The exercise price of the options is $4.625 per share. The closing price of
     the Common Stock was $9.50 on December 31, 2000.

Long-Term Incentive Plan

The executive officers and key employees of the Company participate in a phantom
working  interest plan that is intended to provide  incentive and  motivation to
increase  the  oil  and  gas  reserves  of the  Company  and to  continue  their
employment with the Company. In 2000, the Compensation  Committee determined the
portion of the Company's  interests in the cash flow from certain wells drilled,
recompleted or enhanced during that year,  called the "plan year," which will be
allocated to  participants  in the plan and the  percentage of the remaining net
present value of estimated  future  production from domestic wells for which the
participants  will  receive  payment in the sixth year of an award.  The portion
allocated  to  participants  in the plan is referred to as the "plan cash flow."
The  Compensation  Committee then determines which key employees and consultants
may  participate  in the plan for the plan year and allocates the plan cash flow
among the  participants.  Awards  under  the plan do not  represent  any  actual
ownership interest in the wells. Awards are made in the Compensation Committee's
discretion.  The treatment of phantom working interests upon a change in control
is described below under "Change of Control Arrangements."

The following  table  describes  awards to the Named  Executive  Officers of the
Company for 2000 under the phantom working interest plan.
<TABLE>
<CAPTION>

               Long-Term Incentive Plan Awards in Last Fiscal Year

                                                                   Performance or             Estimated Future
                                             Percentage of          Other Period          Payouts under Non-Stock
                   Name                     Plan Cash Flow          Until Payout           Price-Based Plans (1)
                   ----                     --------------          ------------           -----------------
<S>                                              <C>                    <C>                       <C>
   Anthony J. Gumbiner (2)                       25.00                  2005                      $69,574
   William L. Guzzetti                           7.50                   2005                      $20,872
   Russell P. Meduna                             7.50                   2005                      $20,872
   William J. Baumgartner                        5.71                   2005                      $15,903
   Cathleen M. Osborn                            5.71                   2005                      $15,903
</TABLE>




<PAGE>



(1)  These  amounts are  estimates  based on estimated  reserve  quantities  and
     future  prices.   Because  of  the  uncertainties  inherent  in  estimating
     quantities of reserves and prices,  it is not possible to predict cash flow
     or remaining  net present  value of estimated  future  production  with any
     degree of certainty.

(2)  The award was made to HSC Financial, with which Mr. Gumbiner is associated.

CHANGE OF CONTROL ARRANGEMENTS

       The  summaries  and   descriptions  of  the  Separation   Agreements  and
Agreements  Regarding  Amended and Restated Phantom Working  Interest  Incentive
Plan of Hallwood Energy Corporation are qualified in their entirety by reference
to each such agreement, which have been filed as exhibits (e)(3) through (e)(7),
(e)(10) and (e)(11) to the Company's Schedule 14D-9 and are incorporated  herein
by reference.

       Separation  Agreements.  Upon a change of control of  Hallwood,  provided
that the Named  Executive  Officer  (i) is an  employee  of Hallwood or (ii) the
Named Executive Officer's  employment with Hallwood is involuntarily  terminated
for reasons other than for cause  (provided,  however,  that William L. Guzzetti
and Anthony J. Gumbiner are eligible to receive  benefits  under the  Separation
Agreements  upon any  termination  of  employment  with  Hallwood  regardless of
whether such termination is for cause): (A) such Named Executive Officer will be
entitled to receive a lump sum cash payment in the following amount:  William J.
Baumgartner ?- $465,411, Anthony J. Gumbiner ?- $876,207, William L. Guzzetti ?-
$956,545,  Russell P. Meduna ?- $768,115 and Cathleen M. Osborn ?- $503,192; (B)
all  stock  options,   incentive  stock  options,   performance  shares,   stock
appreciation  rights and  restricted  stock  awards held by the Named  Executive
Officer  shall  become one hundred  percent  vested and  exercisable;  (C) for a
period of 18 months  subsequent to the Name Executive  Officer's  termination of
employment  with Hallwood,  Hallwood will continue,  at its expense,  all health
benefits and  insurance  provided to the Named  Executive  Officer and the Named
Executive Officer's dependents and beneficiaries that were being provided to the
Named  Executive  Officer prior to his or her termination of employment and will
make a lump sum payment for any  additional  income tax  attributable  to health
benefits  and  insurance  coverage and (D) the Named  Executive  Officer will be
entitled to receive the amount set forth in the last sentence of this  paragraph
as consideration for the Named Executive  Officer's agreement (1) not to compete
with Hallwood or any of its  affiliates  for a period  ranging from one to three
years following the Named Executive Officer's Termination of employment;  (2) to
hold certain information  confidential and (3) to refrain from hiring any person
who is an employee of Hallwood for a period  beginning March 29, 2001 and ending
6 months after a change of control occurs.  Fifty percent of each of the amounts
set forth in clause (A) and (D) above are payable to the Named Executive Officer
immediately upon a change of control with the remaining fifty percent payable on
the  sixtieth  day  following  the  date on which a change  of  control  occurs;
provided,  however,  that for all Named Executive Officers other than William L.
Guzzetti  and  Anthony  J.  Gumbiner,  the  Named  Executive  Officer  does  not
voluntarily terminate employment with Hallwood or an affiliate prior to the date
of a change of control  other than (1) by reason of death,  permanent  and total
disability; or (2) because the Named Executive Officer's salary has been reduced
from the level in effect immediately prior to a change of control or (3) because
there  has  been a change  in the  location  of the  Named  Executive  Officer's
principal  place of employment by more than 25 miles from the location where the
Named Executive Officer was employed immediately prior to the change of control.
Each Named Executive  Officer will receive the following amount as consideration
for his or her  noncompete  and no hire  agreement:  William J.  Baumgartner  ?-
$575,000,  Anthony J. Gumbiner ?-  $1,000,000,  William L. Guzzetti ?- $900,000,
Russell P. Meduna ?- $400,000 and Cathleen M. Osborn ?- $325,000.

       Agreement   Regarding  Amended  and  Restated  Phantom  Working  Interest
Incentive  Plan of  Hallwood  Energy  Corporation.  Upon a  change  of  control,
provided  that a Named  Executive  Officer (i) is an employee of Hallwood  and a
participant in its Amended and Restated  Phantom  Working  Interest Plan or (ii)
has, after March 29, 2001, but prior to a change of control,  been involuntarily
terminated from Hallwood other than for cause, each Named Executive Officer will
be  entitled  to  receive  from  Hallwood  the  following  amount  (the  "Agreed
Termination Value"):  William J. Baumgartner ?- $64,871,  Anthony J. Gumbiner ?-
$540,688,  William L.  Guzzetti ?-  $143,131,  Russell P. Meduna ?- $143,131 and
Cathleen M. Osborn ?- $103,557.  Fifty percent of the Agreed  Termination  Value
will be paid to the Named Executive  Officer upon the acceptance for payment of,
and payment by the Purchaser  for, any Shares  pursuant to the Offer (the "Offer
Closing Date").  The remaining fifty percent will be paid to all Named Executive
Officers 60 days  following  the Offer  Closing  Date  provided  that each Named
Executive Officer,  other than Anthony J. Gumbiner and William L. Guzzetti,  has
not  voluntarily  terminated his or her employment  with Hallwood for any reason
other  than (A) death or  disability,  (B) a  reduction  in the Named  Executive
Officer's  salary  from the  level in  effect  immediately  prior to a change of
control or (C) a change in location of the Named  Executive  Officer's  place of
employment  by more than 25 miles from  where the Named  Executive  Officer  was
employed immediately prior to the change of control.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During  2000,  the  Compensation  Committee  of the Board was  comprised of four
Directors,  Mr.  Sebastian,  Chairman,  Mr.  Van  Meter,  Mr.  Holinger  and Dr.
Lubliner.  None of these Directors is or was an officer of the Company or any of
its subsidiaries at any time now or in the past.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
           MANAGEMENT

The  following  table  shows  information,  as of  March  28,  2001,  about  any
individual,  partnership or  corporation  that is known to the Company to be the
beneficial  owner of more than 5% of each class of shares issued and outstanding
and each executive officer,  director and all executives  officers and directors
as a group.  The following  table does not include the potential  effects of the
Merger Agreement between Hallwood and Pure Resources, dated March 29, 2001. If a
person or entity listed in the following  table is the beneficial  owner of less
than one percent of the Company's  common or preferred stock  outstanding,  this
fact is indicated by an asterisk in the table.
<TABLE>
<CAPTION>

                                                      Title of          Number of Shares
                         Name                         Class            Beneficially Owned         Percent of Class

   5% or Greater Holders
   ---------------------
   The Hallwood Group Incorporated(1)
<S>                                                      <C>                <C>                         <C>
   3710 Rawlins Street, Suite 1500                       Common             1,440,000                   14.9
   Dallas, Texas 75219

   Heartland Advisers, Inc. (2)                          Common             1,199,175                   12.4
   789 North Water Street
   Milwaukee, Wisconsin 53202

   Wellington Management Company, LLP (3)                Common               924,200                    9.6
   75 State Stree
   Boston, Massachusetts 02109

   Hall Financial Group and Hall Phoenix/
      Inwood, Ltd. (4)
   6801 Gaylord Parkway, Suite 100                       Common               504,311                    5.2
   Frisco, Texas  75034

   FMR Corp.                                             Common               501,828                    5.2
   82 Devonshire Street
   Boston, Massachusetts 02109

   Directors and Executive Officers

   Anthony J. Gumbiner  (6) (7)                          Common             1,661,134                   17.2

   William L. Guzzetti  (6) (7)                          Common             1,564,497                   16.2
                                                         Preferred                  6                    *
   Russell P. Meduna  (7)                                Common                 94,806                   *
                                                         Preferred                 600                   *
   Cathleen M. Osborn  (7)                               Common                 66,251                   *
                                                         Preferred                 300                   *
   William J. Baumgartner  (7)                           Common                 65,421                   *
   Hans-Peter Holinger  (7)                              Common                     666                  *
   Rex A. Sebastian  (7)                                 Common                     963                  *
                                                         Preferred                   31                  *
   Nathan C. Collins  (7)                                Common                     666                  *
   John R. Isaac, Jr.  (7)                               Common                     666                  *
   Jerry A. Lubliner  (7)                                Common                     666                  *
   Hamilton P. Schrauff  (7)                             Common                     666                  *
   Bill M. Van Meter  (7) (8)                            Common                   1,166                  *
                                                         Preferred                2,000                  *
   All Directors and Executive Officers as a Group       Common                2,082,647              21.6
   (14 persons) (6) (7) (8)                              Preferred                46,819               2.1

</TABLE>

(1)  Information  is from the  Amendment to Schedule  13D of The Hallwood  Group
Incorporated filed May 16, 2000.

(2) Information  is from the  Amendment to Schedule  13G of  Heartland  Advisors
    dated January 16, 2001.  The Schedule 13G states that the shares are held in
    investment  advisory  accounts  of  Heartland  Advisors,  Inc.  and that the
    interests of one such account,  Heartland  Value Fund, a series of Heartland
    Group, Inc., a registered  investment company relates to more than 5% of the
    Common Stock.

(3) Information  is from  Schedule 13G of  Wellington  Management,  Inc.,  dated
    February 13, 2001.  The  Schedule  13G states that  Wellington  acquired the
    shares on behalf of its investment  advisor  clients and that no such client
    owns more than 5% of the Common Stock.

(4) Information is from Schedule 13D of Hall Financial Group, Ltd. and Hall
    Phoenix/Inwood, Ltd. dated December 14, 2000.

(5) Information  is from Schedule 13G of FMR Corp.  dated February 14, 2001. The
    Schedule 13G states that the shares are held in investment advisory accounts
    and that the shares  held in one such  account,  Fidelity  Low Priced  Stock
    Fund, a registered investment company,  relate to more than 5% of the Common
    Stock.

(6)  Includes  1,440,000  shares  of  Common  Stock  beneficially  owned  by The
     Hallwood  Group  Incorporated.  Mr.  Gumbiner  is Chairman of the Board and
     Chief  Executive  Officer  of The  Hallwood  Group  Incorporated,  and  Mr.
     Guzzetti is Executive Vice President.

(7)  The following  number of shares of Common Stock  issuable upon the exercise
     of currently  exercisable  options are included in the amounts  shown:  Mr.
     Gumbiner,  210,434 shares; Mr. Guzzetti, 124,423 shares; Mr. Meduna, 93,762
     shares;  Ms. Osborn,  65,421 shares;  Mr.  Baumgartner,  65,421 shares; Mr.
     Holinger,  666 shares; Mr. Sebastian,  666 shares; Mr. Collins, 666 shares;
     Mr. Isaac, 666 shares; Dr. Lubliner,  666 shares; Mr. Schrauff, 666 shares;
     Mr. Van Meter, 666 shares; other executive officers, 57,562 shares.

(8)  500 shares of Common Stock and 2,000 shares of Preferred Stock are owned by
     Mr. Van Meter's wife's trust, of which Mr. Van Meter is the trustee.



ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See  Item 8 -  Financial  Statements  and  Supplementary  Data  (Note  11 to the
Financial Statements).


<PAGE>


SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                                     HALLWOOD ENERGY CORPORATION

Date:  April 20, 2001                                By: /s/William L. Guzzetti
     --------------------------------------              ----------------------
                                                         William L. Guzzetti
                                                             President