AMENDMENT NO. 4 TO CREDIT AGREEMENT


         AMENDMENT  dated as of May 9, 2000 to the Amended and  Restated  Credit
Agreement  dated as of June 8, 1999,  as amended by Amendment  No. 1 dated as of
October 15, 1999, Amendment No. 2 dated as of January 23, 2000 and Amendment No.
3 dated as of April 27, 2000 (as so  amended,  the  "Credit  Agreement"),  among
HALLWOOD  ENERGY  CORPORATION,  HALLWOOD  ENERGY  PARTNERS,  L.P.  and  HALLWOOD
CONSOLIDATED RESOURCES CORPORATION  (collectively,  the "Borrowers"),  the BANKS
party thereto (the "Banks"),  FIRST UNION NATIONAL BANK, as Collateral Agent and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the "Agent").

                                      W I T N E S S E T H :

         WHEREAS, the parties hereto desire to amend the Credit Agreement as
set forth herein;

         NOW, THEREFORE, the parties hereto agree as follows:

         Section 1. Defined Terms;  References.  Unless  otherwise  specifically
defined herein,  each term used herein which is defined in the Credit  Agreement
has the meaning assigned to such term in the Credit Agreement. Each reference to
"hereof",  "hereunder",  "herein" and "hereby" and each other similar  reference
and  each  reference  to  "this  Agreement"  and each  other  similar  reference
contained in the Credit  Agreement  shall,  on and after the Effective  Date (as
defined in Section 9 below), refer to the Credit Agreement as amended hereby.

         Section 2.  Resetting of the  Availability  Limit.  The  definition  of
"Availability  Limit"  set forth in  Section  1.01 of the  Credit  Agreement  is
amended to read in its entirety as follows:

         "Availability  Limit" means, on any date, an amount equal to the lesser
of  (i)  the  aggregate  amount  of  the  Commitments  at  such  date  and  (ii)
$75,175,000; provided that on any date on which the Debt Limit is reset to a new
amount in accordance with Section  4.17(c)(ii) or Section  4.17(c)(iii) (and, in
the case of any reset  pursuant  to Section  4.17(c)(iii)  that  constitutes  an
increase  in the Debt Limit,  all the Banks have  agreed to such new amount,  in
their sole discretion), the amount set forth in this clause (ii) shall be deemed
to have been amended

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(effective on and as of the date such reset is effective) to be such new amount,
without any further  action on the part of any  Borrower or any Bank.  Except as
set forth in the proviso to clause (ii) of the immediately  preceding  sentence,
the Availability  Limit may be increased only by an amendment in accordance with
Section  8.05,  which  the  Banks  may  agree to or not  agree to in their  sole
discretion.

         Section 3. Notification of Automatic Reset of Debt Limit. The following
sentence is added at the end of Section  4.17(c)(ii):  "The Borrowers shall give
the Agent prompt  notice of any such sale and the Agent shall give the Borrowers
prompt notice of any  redetermination  of the Debt Limit pursuant to this clause
(ii) as a result of any such sale with  respect  to which the Agent  shall  have
received  notice;  provided  that any  failure  or delay by the  Agent in giving
notice of any such redetermination  shall not affect or limit the obligations of
the Borrowers to comply with such redetermined Debt Limit.".

         Section 4. Amendment of the Annual Coverage Ratio  Covenant.  The first
sentence  of  Section  4.28 of the  Credit  Agreement  is  amended by adding the
following  proviso  at the  end  thereof:  ";  provided  that  for  purposes  of
determining  the  amount of  scheduled  principal  payments  on the Loans in the
calendar year 2002, only 45% of the amount of scheduled payments of principal on
the Loans in such calendar year shall be included."

         Section 5.  Amendment of the Interest Coverage Ratio Covenant.  The
penultimate sentence of Section 4.34 of the Credit Agreement is amended to read
in its entirety as follows:

         For purposes of this Section 4.34,  "Historical  CFADS" means,  for any
period,  gross cash operating  revenues properly allocable to Petroleum Property
for such  period less the  following  cash items:  royalties,  operating  costs,
severance, windfall profits and other wellhead taxes, general and administrative
expenses and current  income and other taxes  properly  allocable to such period
and cash capital  expenditures made during such period and properly allocable to
a  Petroleum  Property  owned as of the date of the most recent  Reserve  Report
(other than cash capital expenditures (i) constituting the purchase price of any
such Petroleum Property permitted to be purchased  hereunder or (ii) exploration
costs  associated  with any Petroleum  Property owned as of the date of the most
recent Reserve Report).

         Section 6.  Representations of Borrowers.  The Borrowers  represent and
warrant that (i) the  representations  and warranties of the Borrowers set forth
in Article 3 of the Credit  Agreement  are true on and as of the date hereof and
(ii) no Default has occurred and is continuing.

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         Section 7.  Governing Law.  This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

         Section 8. Counterparts.  This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         Section 9. Effectiveness.  This Amendment shall become effective on the
date (the  "Effective  Date") on which the Agent  shall have  received  from the
Borrowers and the Required  Banks a  counterpart  hereof signed by such party or
facsimile or other written confirmation (in form satisfactory to the Agent) that
such party has signed a counterpart hereof.

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         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.


                                            HALLWOOD ENERGY CORPORATION



                                            By:
                                                  Name:
                                                  Title:


                                            HALLWOOD CONSOLIDATED
                                                RESOURCES CORPORATION



                                            By:
                                                  Name:
                                                  Title:



                                            HALLWOOD ENERGY PARTNERS, L.P.


                                            By: HEC Acquisition Corp., its
                                                   General Partner

                                                  By___________________________
                                                       Name:
                                                        Title:




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                                            MORGAN GUARANTY TRUST
                                                  COMPANY OF NEW YORK



                                            By:
                                                  Name:
                                                  Title:


                                            FIRST UNION NATIONAL BANK



                                            By:
                                                  Name:
                                                  Title:


                                            BANK OF AMERICA, N.A., formerly
                                                  NATIONSBANK, N.A.



                                            By:
                                                  Name:
                                                  Title:

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Acknowledged by:

                                    HALLWOOD LA PLATA, LLC
                                    LA PLATA ASSOCIATES, LLC

                                    By: HALLWOOD PETROLEUM, INC.

                                    By:______________________________________
                                         Name:
                                         Title:

                                    The Manager of Hallwood La Plata LLC and La
                                            Plata Associates LLC

                                    CONCISE OIL AND GAS PARTNERSHIP
                                    EM NOMINEE PARTNERSHIP COMPANY
                                    MAY ENERGY PARTNERS OPERATING
                                                 PARTNERSHIP LTD.

                                    By: HEC ACQUISITION CORP.

                                    By:______________________________________
                                         Name:
                                         Title:

                                    The  General  Partner of Concise Oil and Gas
                                    Partnership, EM Nominee Partnership Company,
                                    May Energy  Partners  Operating  Partnership
                                    LTD.

                                    HALLWOOD CONSOLIDATED PARTNERS,
                                    L.P.

                                    By: HALLWOOD CONSOLIDATED
                                    RESOURCES CORPORATION

                                    By:______________________________________
                                         Name:
                                         Title:

                                    The General Partner of Hallwood Consolidated
                                            Partners, L.P.


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