UNITED STATES
                                               
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q
                             Amended February 27, 1996
MARK ONE
   X         QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE  SECURITIES
             EXCHANGE ACT OF 1934 

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995

             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)
                                                    
                            ------------------------


                    TEXAS                               75-1319083
       (State or other jurisdiction of               (I.R.S. Employer
        incorporation or organization)            Identification Number)
       4582 SOUTH ULSTER STREET PARKWAY
                  SUITE 1700
               DENVER, COLORADO                            80237
   (Address of principal executive offices)             (Zip Code)

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

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       No    

Shares of Common Stock outstanding at August 11, 1995                    436,126

<TABLE>
<CAPTION>
                           HALLWOOD ENERGY CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                          (In thousands except Shares)



                                          June 30,    December 31,
                                            1995          1994    
                                           --------    ------------
                                         (Unaudited)

<S>                                  <C>             <C>
 CURRENT ASSETS
  Cash and cash equivalents             $  2,022       $    668
  Accounts receivable:
    Affiliates                               528            526
    Trade                                      7              7
  Current assets of affiliate              1,859          1,760
                                          -------        -------
      Total                                4,416          2,961
                                          -------        -------<PAGE>
 PROPERTY, PLANT AND EQUIPMENT,  at
 cost
  Oil and gas properties (full cost                                       
   method):
    Proved mineral interests             112,373        111,951               
    Unproved mineral interests -
     domestic                                 40             46  
    Unproved mineral intersts -  
     foreign                                                288
    Other property and equipment           3,745          3,745
                                          -------        -------
    
        Total                              116,158        116,030

  Less accumulated depreciation, 
    depletion, amortization and
    property impairment                 (106,302)      (105,461)
                                         -------         -------

      Net Property, Plant and Equipment    9,856         10,569
                                          -------        -------
 OTHER ASSETS
  Investment in common stock of parent
  (at fair value)                          2,744          1,680
  Investment in bonds of parent (at                            
  cost adjusted for amortization of             
  discount)                                               1,352
  Noncurrent assets of affiliate           1,415          1,704
                                          -------        -------

      Total                                4,159          4,736
                                          -------        -------
 TOTAL ASSETS                           $ 18,431       $ 18,266
                                         =======         =======

<CAPTION>

                           CONSOLIDATED BALANCE SHEETS
                          (In thousands except Shares)
                                   (Continued)



                                          June 30,    December 31,
                                            1995          1994    
                                           --------    ------------
                                         (Unaudited)
<S>                                  <C>             <C>
 CURRENT LIABILITIES
  Accounts payable and accrued         
  liabilities                           $    102       $    154
  Current portion of long-term debt                         225               
  Current liabilities of affiliate         2,357          2,879
                                         -------       --------
                                           2,684          3,033
                                          -------        -------

 NONCURRENT LIABILITIES
  Long-term debt                             725
  Long-term obligations of affiliate       5,056          3,917
                                          -------        -------
                                           5,781          3,917
                                          -------        -------

      Total Liabilities                    8,465          6,950
                                          -------        -------<PAGE>
 STOCKHOLDERS' EQUITY
  Series D convertible, cumulative, 
    redeemable preferred stock, $.01
    par value; 65,000 shares
    authorized;
    18,864 shares issued with a                               
    liquidation 
    preference of $1,154                                      1
  Series E convertible preferred                            
  stock; $.01 stated
    value; 450,000 shares authorized;        
    356,000 shares                      
    issued with a liquidation            
    preference of $.01 per share               4              4
  Common stock, $.50 par value,             
    80,000,000 shares
    authorized; 842,121 shares issued        421            421
  Capital in excess of par value          57,397         58,248
  Accumulated deficit                    (42,496)       (42,290)
  Unrealized loss on investment in
  common stock of parent                    (146)          (896) 
  Less cost of treasury stock of
  347,995 common shares
    and 18,864 and 7,500 Series D
    preferred shares
    as of 1995 and 1994, respectively     (5,214)        (4,172)
                                          -------        -------

      Total Stockholders' Equity           9,966         11,316
                                          -------        -------

 TOTAL LIABILITIES AND STOCKHOLDERS'
 EQUITY                                 $ 18,431       $ 18,266
                                         =======         =======
<CAPTION>
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)
                      (In thousands except per Share data)


                                          For the Three Months
                                             Ended June 30,   
                                           --------------------
                                             1995        1994 
                                            ------      ------
<S>                                    <C>         <C> 
 REVENUES:
  Oil revenue                            $   519     $   507
  Gas revenue                                710         928
                                          ------      ------
                                           1,229       1,435
                                          ------      ------

 EXPENSES:
  Production operating                       303         449
  General and administrative                 248         209
  Depreciation, depletion and               
  amortization                               443         460
  Interest                                   133          94
                                          ------      ------
                                           1,127       1,212
                                          ------      ------<PAGE>
 OTHER INCOME (EXPENSE):                        
  Impairment of investment in parent                  (3,249)
  Miscellaneous                             (147)        123
                                           ------      ------
                                            (147)     (3,126)
                                           ------      ------

 NET LOSS                                    (45)     (2,903)

 PREFERRED STOCK DIVIDENDS                                18
                                           ------      ------
 NET LOSS FOR COMMON STOCKHOLDERS        $   (45)     $(2,921)


 NET LOSS PER COMMON SHARE               $  (.09)     $  (3.44)  
                                           ======      =======  
 WEIGHTED AVERAGE COMMON SHARES              494         850
                                           ======      ======
<CAPTION>

                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)
                      (In thousands except per Share data)


                                           For the Six Months
                                             Ended June 30,   
                                           --------------------

                                             1995        1994 
                                            ------      ------
<S>                                    <C>         <C> 

 REVENUES:
  Oil revenue                            $ 1,037     $   961
  Gas revenue                              1,490       2,101
                                          ------      ------

                                           2,527       3,062
                                          ------      ------
 EXPENSES:
  Production operating                       642         793
  General and administrative                 500         441
  Depreciation, depletion and                         
  amortization                               841         940
  Impairment of oil and gas properties       464
  Interest                                   204         192
                                          ------      ------
                                           2,651       2,366
                                          ------      ------

 OTHER INCOME (EXPENSE):                        
  Impairment of investment in parent                  (3,249)
  Miscellaneous                              (82)        170
                                           ------      ------
                                             (82)     (3,079)
                                           ------      ------

 NET LOSS                                   (206)     (2,383)
 PREFERRED STOCK DIVIDENDS                   356          36
                                           ------      ------

 NET LOSS FOR COMMON STOCKHOLDERS        $  (562)    $(2,419)
 NET LOSS PER COMMON SHARE               $ (1.14)   $ (2.85) 
                                           =======    =======  

 WEIGHTED AVERAGE COMMON SHARES              494         850
                                          =======      =======

<CAPTION>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)


                                           For the Six Months
                                             Ended June 30,  
                                            ------------------

                                            1995         1994 
                                            ----         ----
<S>                                    <C>         <C>
 OPERATING ACTIVITIES:
  Net loss                               $  (206)    $(2,383)
  Adjustments to reconcile net loss to
  net
    cash used in operating activities:
      Depreciation, depletion,
      amortization
       and property impairment             1,305         940
      Impairment of investment in               
      parent                                           3,249
      Undistributed earnings of
      affiliate                           (1,325)     (1,864)
      Amortization of bond discount          (24)        (49)
                                           ------      ------

       Cash used in operations
         before working capital changes     (250)       (107)
  Changes in operating assets and
  liabilities  
    used cash net of noncash activity:          
      Receivables from affiliates                        (43)
      Receivables - trade                                 (2)
      Accounts payable and accrued
      liabilities                            (52)       (193) 
                                           ------      ------


       Net cash used in operating                           
       activities                           (302)       (345)
                                           ------      ------

 INVESTING ACTIVITIES:
  Additions to property                      (19)        (83)
  Proceeds from property sales                             4
  Distributions received from
  affiliate                                1,554       1,566
  Proceeds from sale of investment in
  bonds of parent                          1,376
  Purchase of common stock of parent        (314)           
  Other investing activities                              15
                                          ------      ------
       Net cash provided by investing            
       activities                          2,597       1,502
                                          ------      ------
 FINANCING ACTIVITIES:
  Dividends paid                            (849)     (1,481)
  Repurchase of Series D preferred
  shares                                  (1,042)
  Proceeds from long-term debt               950
                                          ------     ------ 
       Net cash used in financing               
       activities                           (941)     (1,481)
                                           ------      ------

 INCREASE (DECREASE) IN CASH AND CASH           
 EQUIVALENTS                               1,354        (324)

 CASH AND CASH EQUIVALENTS:
 BEGINNING OF PERIOD                         668       1,128
                                           ------      ------

 END OF PERIOD                           $ 2,022     $   804
                                          ======      ======
</TABLE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE 1 - GENERAL

Hallwood  Energy Corporation  ("HEC")  is a  Texas  corporation engaged  in  the
development, production and sale of  oil and gas.  HEC is the general partner of
Hallwood  Energy Partners,  L. P.  ("HEP"), a  publicly traded  Delaware limited
partnership.   HEP  commenced  operations in  August  1985 after  completing  an
exchange offer in which HEP acquired  oil and gas properties and operations from
HEC,  24 oil and gas limited  partnerships of which HEC  was the general partner
and certain working interest owners that had participated in wells  with HEC and
the limited partnerships.  HEC now conducts substantially all of  its operations
through HEP.  The activities of HEP are conducted by HEP Operating  Partners, L.
P. ("HEPO") and EDP Operating, Ltd. ("EDPO").

HEC's  wholly-owned subsidiaries  include  Hallwood Operating  Company  ("HOC"),
former operator  for HEC's properties,  and Hallwood  G. P.,  Inc., the  general
partner  of  EDPO.    Unless  otherwise  indicated,  all  references  to  HEC in
connection with the ownership, exploration, development or production of oil and
gas  properties refer  to HEC  and its  proportionate ownership  of HEP.   HEC's
parent  company, The Hallwood Group Incorporated ("Hallwood Group"), owns 70% of
the outstanding shares of HEC on a fully diluted basis.

The interim financial data are unaudited; however, in the opinion of management,
the  interim data include all  adjustments, consisting only  of normal recurring
adjustments, necessary  for a fair presentation  of the results for  the interim
periods.  These  financial statements  should be  read in  conjunction with  the
financial statements and  accompanying footnotes included in  HEC's December 31,
1994 Annual Report on Form 10-K.  

ACCOUNTING POLICIES 

INVESTMENT IN HEP

HEC's general partner  interest in HEP entitles  it to a  share of net  revenues
derived  from  HEP's  properties  ranging  from   2%  to  25%,  and  HEC   holds
approximately  7.3% of  HEP's  limited  partner units.    HEC  accounts for  its
ownership  of  HEP using  the proportionate  consolidation method  of accounting
whereby  HEC records  its  proportional share  of  each  of HEP's  revenues  and
expenses,  current  assets, current  liabilities,  noncurrent  assets, long-term
obligations and  fixed assets.   HEP  owns approximately 40%  of its  affiliate,
Hallwood  Consolidated Resources  Corporation ("HCRC"),  which HEP  accounts for
under the equity method.

INVESTMENT IN PARENT

Hallwood Group, a public  company traded on  the New York  Stock Exchange, is  a
diversified  holding  company   with  interests  in   oil  and  gas,   specialty
restaurants,  real  estate,  textile products  and  hotels.    During 1991,  HEC
purchased  $2,149,000  aggregate  principal  amount of  Hallwood  Group's  13.5%
Subordinated Debentures  due July  31,  2009 ("Subordinated  Debentures").   The
purchase price was  $1,429,000 including  $99,000 of accrued  interest.   During
1992, HEC received an additional $290,000 face value of bonds as payment in lieu
of interest.  HEC  exchanged the original  issue Subordinated Debentures for  7%
Collateralized Subordinated Debentures (the  "New Collateralized Debentures") on
March 2, 1993.  Interest  on the New Collateralized Debentures accrued  from the
date of the  exchange at the rate  of 7% per  annum, payable quarterly in  cash.
Additionally, during the  first quarter  of 1993, Hallwood  Group purchased  for
$380,000  the Subordinated Debentures  that had been  issued to HEC  in 1991 and
1992  as  payment  in lieu  of  interest.   On  March 29,  1995,  Hallwood Group
repurchased  the  New  Collateralized  Debentures for  $1,376,000  plus  accrued
interest through the purchase date.


From  1990 through the  second quarter of  1995, HEC acquired  249,434 shares of
Hallwood  Group's  Common Stock  (adjusted  for the  one-for-four  reverse stock
split), or approximately 16% of the outstanding shares of Hallwood Group, on the
open market at an average cost of $12.33 per share.  HEC is holding the stock of
Hallwood Group as a long-term investment and has classified it  as an available-
for-sale security.  During the period from July 1, 1995 through August 11, 1995,
HEC purchased an additional 9,875 shares at an average cost of $10.46 per share.
The  Company does not have a current  intention to purchase additional shares of
Hallwood Group during 1995 but may consider doing so thereafter.


NOTE 2 - DIVIDENDS

HEC paid a dividend  of $1.00 per share of  common stock and $1.00 per  share of
Series E  Preferred Stock  on March  3, 1995  to all  shareholders of  record on
February 28, 1995.  On July 18, 1995, HEC declared a dividend of $1.50 per share
of common stock to  all shareholders of record on  July 31, 1995, payable  on or
about August 15, 1995.

The   Board  of  Directors  will  determine  future  dividends,  if  any,  after
consideration of the cash flow and working capital needs of HEC.


NOTE 3 - REPURCHASES OF SERIES D PREFERRED STOCK AND COMMON STOCK

During the first quarter of 1995,  HEC repurchased 1,500 shares of its  Series D
Preferred  Stock for  $90.88 per  share.   During  April 1995,  in two  separate
transactions,  HEC  repurchased  the remaining  9,864  shares  of  its Series  D
Preferred Stock at $91.80 per share.

In July 1995, HEC purchased 58,000 shares of its common stock from an individual
in  a privately negotiated transaction for a  total cost of $1,189,000.  Neither
the Company nor its affiliated entities have any current intention to purchase a
significant number of  additional shares  of the Company's  common stock  during
1995, but may consider doing so thereafter.


NOTE 4 - DEBT

During the second quarter of  1995, the Company entered into a  credit agreement
with a bank that has committed to loan the Company up to $1,500,000.  As of June
30, 1995 the Company has borrowed  $950,000 against the credit line.  Subsequent
to  the  end  of  the  second  quarter,  HEC  borrowed an  additional  $250,000.
Borrowings against the  credit line bear interest at the  bank's prime rate plus
2% (11% at June 30, 1995).  Interest is payable monthly and quarterly  principal
payments of $75,000, as adjusted for the borrowings subsequent to June 30, 1995,
commence December 1, 1995.  The credit line is secured by the HEP Units owned by
the Company.    The credit  agreement  limits aggregate  dividends paid  by  the
Company to $3.50 per share each fiscal year.


NOTE 5 - LEGAL PROCEEDINGS

On August 15, 1995, the  United States District Court for the  Southern District
of New York  issued a Final  Order approving the  settlement of In Re:  Hallwood
Energy Partners,  L. P.  Securities Litigation,  90 Civ. 1555.   The  settlement
class  is composed of  all persons and  entities who beneficially  owned or held
units of  Energy Development  Partners,  Ltd. ("EDP")  on May  9,  1990 and  who
exchanged, or were eligible to exchange,  their EDP units for HEP Units pursuant
to the merger of EDP into HEP (the "Transaction"). 


As part  of  the settlement,  HEP  will make  a  cash payment  of  approximately
$2,870,000, which was recorded as an expense  in HEP's 1994 financial statements
as  the  estimated  cost  associated  with  the  litigation.   In  addition,  in
connection  with  plaintiffs' allegation  that  they  did  not receive  adequate
compensation for their EDP Units at the  time of the Transaction, HEP will issue
Units having a market value of $5,330,000.  When issued, these  Units, which are
presently estimated  to  total approximately  1,185,000,  will be  treated,  for
financial statement purposes only, as additional Units issued in connection with
the Transaction,  which was accounted for as  a reorganization of entities under
common control,  in a  manner similar  to a  pooling of  interests, and will  be
reflected  as outstanding Units since May 9,  1990, the date of the Transaction.
As a result, after the Units are issued, the number of Units outstanding and the
net  income  (loss) per  Unit  will be  retroactively restated  for  all periods
subsequent to the Transaction.  The Board of Directors of HCRC has  approved the
exercise  by HCRC  of an  option to  purchase all  of the Units  for $5,330,000,
provided that the  effective price paid  by HCRC for the  Units is no  more than
$6.00 and  no  less  than $3.875.    If  the  completion of  the  settlement  is
substantially delayed, or  if there is a material change  in circumstances, HCRC
will reassess its current intention to purchase the settlement Units.  HEP Units
will  be issued  and the settlement  proceeds will  be distributed  to the class
after all time periods for an appeal of the final settlement order have expired.
Unless there is an  appeal of the court's order, HEP expects  to issue the Units
and pay the cash portion to the class nominee in late September or October 1995.

Trial in the lawsuit styled  Stutes v. Hallwood Petroleum, Inc. et al.  has been
set  for February  1996.   The  plaintiff  in  the lawsuit,  a  driver for  Koch
Services, alleges that  as a result of exposure  to benzene in the  petroleum he
was hauling from various  wells owned and operated  by Hallwood Petroleum,  Inc.
("HPI")  and  the  approximately  80  other   named  defendants,  he  contracted
myelogenous  leukemia.  Discovery  is ongoing.   HPI plans  to vigorously defend
this case, but cannot predict the outcome  of this matter or any possible effect
an uninsured or unindemnified adverse outcome might have.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

FINANCING

During the second  quarter of 1995, the Company entered  into a credit agreement
with a bank that has committed to loan the Company up to $1,500,000.  As of June
30, 1995 the Company has borrowed $950,000 against the credit  line.  Subsequent
to  the  end  of  the  second quarter,  HEC  borrowed  an  additional  $250,000.
Borrowings  against the credit line bear interest  at the bank's prime rate plus
2% (11% at June 30, 1995).  Interest  is payable monthly and quarterly principal
payments of $75,000, as adjusted for the borrowings subsequent to June 30, 1995,
commence December 1, 1995.  The credit line is secured by the HEP Units owned by
the  Company.   The  credit agreement  limits aggregate  dividends  paid by  the
Company to $3.50 per share each fiscal year.

Included  in the  accompanying  balance sheet  at  June 30,  1995  are long-term
obligations of affiliate of $5,056,000.   This amount represents HEC's share  of
HEP's outstanding  long-term obligations which consist  primarily of $21,700,000
borrowed under a  line of credit and $12,857,000 borrowed  under a note purchase
agreement.  HEP's borrowings are secured by a first lien on approximately 80% in
value of HEP's oil and gas properties.

PROPERTY SALES AND CAPITAL BUDGET

During the  second quarter of  1995 and through  August 11, 1995,  HEC purchased
35,309  shares of Hallwood  Group at an average  cost of $11.83  per share.  HEC
intends  to  spend up  to  an additional  $80,000  to purchase  common  stock of
Hallwood Group. 

During  the first quarter of 1995, HEC  repurchased 1,500 shares of its Series D
Preferred Stock for $90.88 per  share.  During the  second quarter 1995, in  two
separate  transactions, HEC repurchased the remaining 9,864 shares of its Series
D Preferred Stock at $91.80 per share.

On  July 17,  1995, HEC  purchased 58,000  shares of  its  common stock  from an
individual   in  a  privately  negotiated  transaction  for  a  total  price  of
$1,189,000.

HEC had no  material property  acquisitions, sales,  exploration or  development
activity during  the second  quarter of  1995.  A  summary of  HEP's significant
property transactions follows.

CAPITAL PROJECTS

For 1995, HEP has a capital budget of $15,800,000 which includes $11,600,000 for
direct  expenditures  and  $4,200,000  for  indirect  expenditures  through  its
investment in Hallwood Spraberry Drilling Company, L.L.C. ("HSD").  Through June
30, 1995, HEP  incurred approximately $9,299,000  in capital expenditures  which
includes  $6,456,000  directly  and  $2,843,000  indirectly  through  HSD.     A
description  of significant exploration and development projects to date in 1995
follows.

HSD has incurred approximately  $2,843,000, net to HEP's interest,  through June
30, 1995  for 20  drilled wells, 12  recompletions and  acquisition of  drilling
leases on the Rocker  "b" Ranch in Reagan County  and Irion County, Texas.   HSD
has its own line of credit of  $4,000,000, net to HEP's interest, provided by  a
third party lender.  The line of credit is secured only by certain leases on the
Rocker  "b" Ranch and  is otherwise  nonrecourse to HEP.   Based  on the initial
success of the drilling  and recompletions, HEP spent approximately  $780,000 on
additional acreage  in the Rocker "b"  Ranch during the second  quarter, and HSD
plans  to  expand its  project  area to  include this  acreage.   HSD  has three
drilling rigs under contract  in the area currently,  and now plans to  drill 54
wells by  the  end of  1995.   It  is HEP's  intention  to arrange  third  party
financing for the drilling.  The  wells drilled and recompleted through June 30,
1995  added a  total of  1 million  equivalent barrels  of proven  developed and
undeveloped reserves, including 640,000 equivalent barrels  which were booked as
proven undeveloped reserves  at December 31, 1994.   From June 30  to August 11,
1995,  HSD  drilled an  additional  seven  wells.    The  39  wells  drilled  or
recompleted since January 1, 1995,  have increased HEP's share of production  on
the Rocker "b" properties by 590 barrels of oil equivalent per day. 

HEP's  $11,600,000 direct  capital budget  is  being expended  on  a variety  of
projects  described below.   The  reserve additions  generated by  the following
expenditures resulted in replacement of 72% of production during  the first half
of 1995 net of downward revisions caused primarily by price declines.

HEP  spent approximately  $825,000 on  six successful  drilling wells  and eight
successful recompletions  in the West  Texas Kermit  area where HEP  has working
interests  ranging from 25%  to 80%.   Gross production on  these properties has
increased by 690 barrels of oil per day and  1,275 mcf per day.  Future projects
in the  area include secondary recovery  in the San Andres  and Holt Formations.
It  is anticipated that six more wells  will be recompleted and seven more wells
will be drilled by year end.   

A workover on the G.S. Boudreaux in Lafayette Parish  increased gross production
rates from 17,500  mcf per day and 370  barrels of condensate per day  to 22,000
mcf per day and  450 barrels of condensate per day during  the second quarter of
1995.   The increased  production rate on  the G.S. Boudreaux  is anticipated to
increase the state administered  production allowable for the A.L.  Boudreaux in
the same area  from its current 20,000 mcf  per day to 28,000 mcf per  day.  HEP
has an 26% interest in the A.L. Boudreaux.

In Richland  County, Montana,  the Lewis  #1 was  recompleted  to the  Interlake
Formation in the  first quarter of 1995, and  the well is currently  flowing 325
barrels of oil per  day and 165 mcf per  day.  Two development wells  to further
exploit  this field's reserves  are planned  for 1995.   HEP  has a  22% working
interest in the area.

In  the first six months of 1995, HEP  spent approximately $290,000 on a program
started in late  1994 in New Mexico.  This amount includes eight successful non-
operated  development  wells  in Lea  County,  New  Mexico,  and two  successful
operated recompletions in Eddy County, New Mexico, having gross combined initial
flowing potentials of 2,750 barrels of oil per  day and 3,525 mcf per day.   HEP
has a 5% working  interest in the Lea County  field and 25% to 50%  interests in
the Eddy  County wells.  An additional five nonoperated wells are expected to be
drilled by the end of 1996.

In May 1995,  HEP completed an exploratory well in  Hot Springs County, Wyoming.
The  well is  flowing 550  barrels of  oil per  day, and  a delineation  well is
presently  being  drilled.   HEP  has  a 17%  working  interest  in this  field.
Depending upon the results of the delineation well, additional field development
is possible.
 
In the first  six months of  1995, HEP drilled two  additional coal bed  methane
development wells  and acquired working interests  in the San Juan  Basin of New
Mexico, for a total of approximately $194,000.  The two new wells have increased
gross  production in  this  area by  325 mcf  per day,  and gross  production is
expected to  increase further as the  Fruitland Coal dewaters.   HEP has working
interests in these new wells of 18% and 25%.

During  the first six  months of 1995,  HEP also acquired  additional acreage in
Martin County, Reagan County and Irion County, Texas for approximately $497,000.
Nine wells are  planned to be drilled on the Irion  County acreage in 1995.  HEP
has also spent approximately $555,000 on two development wells in Reagan County,
Texas in  which it has a  90% working interest.   Significant additional acreage
acquisition  in 1995  is anticipated  to support  1996 drilling plans  in Reagan
County.  Numerous other  projects, which are individually less  significant, are
also underway in Montana, Colorado, North Dakota, Texas and Utah.  Additionally,
six wildcat exploration wells are planned for the second half of 1995.

During  the first quarter of 1995, Hallwood Petroleum Indonesia, Inc. ("Hallwood
Indonesia")  completed and evaluated its first well,  PTH-01, in the Telaga Said
Field in North Sumatra, Indonesia.   A 39 barrel per day oil test  was obtained,
but insufficient  reserves were  indicated to  justify field development  costs.
Consequently, Hallwood Indonesia has  decided to relinquish its interest  in the
contract area and is  in the process of closing down its  operations there.  HEP
recorded $4,051,000 of  impairment expense in the  first quarter of  1995, which
represents the write-off of its entire investment in Hallwood Indonesia.

DIVIDENDS

HEC paid a dividend  of $1.00 per share of  common stock and $1.00 per  share of
Series E  Preferred Stock on  March 3, 1995,  to all  shareholders of record  on
February 28, 1995.  On July 18, 1995, HEC declared a dividend of $1.50 per share
of common stock  to all shareholders of record  on July 31, 1995, payable  on or
about August 15, 1995.

The   Board  of  Directors  will  determine  future  dividends,  if  any,  after
consideration of the cash flow and the working capital needs of HEC.

HEP DISTRIBUTIONS

HEP  declared a  limited partner  distribution of  $.20 per  Unit and  a general
partner distribution  of $634,000  for the  second quarter  of 1995, payable  on
August 15, 1995.  The total of the distributions receivable by HEC is  $765,000,
which has been accrued in receivables from affiliates at June 30, 1995.

RESULTS OF OPERATIONS

The following  table is presented to  contrast HEC's average oil  and gas prices
and  production.   Significant  fluctuations are  discussed in  the accompanying
narrative.
<TABLE>
<CAPTION>
                              OIL AND GAS PRICES AND PRODUCTION
                               (In thousands except for price)
                    For the Three Months Ended   For the Six Months Ended
                             June 30,                    June 30,

                        1995          1994          1995          1994 
                       ------        ------        ------        ------

                     Oil    Gas    Oil    Gas    Oil    Gas    Oil    Gas 
                    ----   ----   ----   ----   ----   ----   ----   ----
                   (bbl)  (mcf)  (bbl)  (mcf)  (bbl)  (mcf)  (bbl)  (mcf)
   <S>          <C>      <C>    <C>     <C>   <C>     <C>   <C>     <C>

      Average 
        price      $16.22  $1.62 $16.90  $1.96 $16.73  $1.69 $15.75  $2.28

      Production       32    437     30    474     62    880     61    922

</TABLE>
QUARTER ENDED JUNE 30, 1995 COMPARED TO QUARTER ENDED JUNE 30, 1994

OIL REVENUE  

Oil revenue increased $12,000 during the second quarter of 1995 as compared with
the second quarter  of 1994.  This  increase is comprised of an  increase in oil
production from  30,000 barrels  in 1994  to 32,000  barrels  in 1995  partially
offset by a decrease in oil prices from $16.90  per barrel in 1994 to $16.22 per
barrel  in 1995.  The increase in  oil production is due to increased production
from  developmental drilling projects in  West Texas partially  offset by normal
production declines.

GAS REVENUE  

Gas  revenue decreased $218,000  during the second  quarter of  1995 as compared
with the  corresponding period in  1994 primarily as  a result of  a decrease in
average gas prices from $1.96  per mcf in 1994 to $1.62 in 1995  combined with a
decrease  in production from 474,000  mcf in 1994  to 437,000 mcf in  1995.  The
decrease  in  gas production  is primarily  due  to normal  production declines,
allowable production limits and gas balancing during the second quarter of 1995.

PRODUCTION OPERATING EXPENSE

Production  operating expense  decreased $146,000 during  the second  quarter of
1995  as compared with the second quarter of 1994.  The decrease is comprised of
lower  production taxes  resulting from  the 14%  decrease in  revenue discussed
above combined with general operating cost reductions in West Texas.

GENERAL AND ADMINISTRATIVE EXPENSE

General  and   administrative  expense   includes  costs  incurred   for  direct
administrative services  such as  legal and  audit fees,  as  well as  allocated
internal  overhead incurred by Hallwood Petroleum, Inc. ("HPI"), an affiliate of
HEC, which manages and operates certain oil and gas properties on behalf of HEC,
HEP  and their  affiliates.   These  costs increased  $39,000 during  the second
quarter of 1995 as compared to the  second quarter of 1994, primarily due to  an
increase in allocated internal overhead.

DEPRECIATION, DEPLETION AND AMORTIZATION 

Depreciation, depletion  and amortization  expense decreased $17,000  during the
second  quarter of  1995  as compared  with the  second  quarter of  1994.   The
decrease is  primarily due to  lower net capitalized  costs in 1995  as compared
with 1994. 

INTEREST EXPENSE

Interest expense increased $39,000 during the second quarter of 1995 as compared
with the second  quarter of 1994 as a result of  HEC's borrowings under its line
of credit during the second quarter of 1995.

IMPAIRMENT OF INVESTMENT IN PARENT

Impairment of investment  in parent of $3,249,000 during the year ended December
31, 1994 represents an  other than temporary  decline in the  fair value of  the
Hallwood Group stock  held by HEC.   The impairment, which was  recorded at June
30, 1994, reflects the difference between the market value of the stock  at June
30, 1994 of $2.875 per share and HEC's original cost basis of $6.50 per share.

MISCELLANEOUS INCOME (EXPENSE)

Miscellaneous  income  (expense) consists  primarily  of  HEC's direct  interest
income, as well as HEC's share of HEP's interest income,  facilities income from
two gathering  systems  in  New Mexico,  pipeline  revenue, equity  in  loss  of
affiliate and miscellaneous  income or expense.  The decrease of $270,000 during
the  second quarter  of 1995  as compared  with the  second quarter  of  1994 is
primarily  due to an  increase in HEP's  equity in loss  of affiliate due  to an
impairment of oil and gas properties recorded by HEP's affiliate.  The remaining
decrease is comprised of  numerous other items,  none of which are  individually
significant.

INCOME TAX BENEFIT

There was no  income tax  benefit recorded  in either 1995  or 1994  due to  the
existence of net operating loss carryforwards.


FIRST SIX MONTHS 1995 COMPARED TO FIRST SIX MONTHS 1994

The comparisons for  the first six  months of 1995 and  the first six  months of
1994 are consistent with those discussed in the second quarter  of 1995 compared
to the second quarter of 1994 except for the following:

OIL REVENUE

Oil revenue  increased $76,000 during the  first six months of  1995 as compared
with the first six months  of 1994 due to an increase in oil  prices from $15.75
per  barrel in 1994 to $16.73 per barrel in 1995 combined with a slight increase
in oil  production from 61,000 barrels in  1994 to 62,000 barrels  in 1995.  The
production increase is due  to increased production from developmental  drilling
projects in West Texas partially offset by normal production declines.

GAS REVENUE

Gas  revenue decreased $611,000 during the first  six months of 1995 as compared
with the same period in 1994 due to a decrease in gas prices from $2.28 per  mcf
in 1994 to  $1.69 per mcf in  1995 combined with  a decrease in production  from
922,000 mcf in 1994 to  880,000 mcf in 1995.  The decrease in  production is due
to normal production declines and allowable production limits.

IMPAIRMENT OF OIL AND GAS PROPERTIES

Impairment of  oil and gas  properties represents  HEC's pro rata  share of  the
write-off of HEP's Indonesian operations.


PART II -  OTHER INFORMATION


ITEM 1  -  LEGAL PROCEEDINGS

      Reference is made to  Item 8 - Note 11  of Form 10-K for the  year ended
      December 31, 1994, Item 1  - Note 4 of  Form 10-Q for the quarter  ended
      March 31, 1995 and  Item 1 - Note 5  of Form 10-Q for the  quarter ended
      June 30, 1995.


ITEM 2  -  CHANGES IN SECURITIES

      None.


ITEM 3  -  DEFAULTS UPON SENIOR SECURITIES

      None.


ITEM 4  -  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
           
      Reference is made  to Part II, Item 4 of  Form 10-Q for the quarter  ended
      March 31, 1995.


ITEM 5  -  OTHER INFORMATION
           
      None.


ITEM 6  -  EXHIBITS AND REPORTS ON FORM 8-K
                                                            EXHIBITS

      10.20  Loan Agreement with NBD Bank dated May 19, 1995.



SIGNATURE
         

Pursuant to  the  requirements 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<PAGE>


 Date:  August 11, 1995          By:   Robert S. Pfeiffer      
      -------------------------     ---------------------------
                                     Robert S. Pfeiffer, Vice
                                     President
                                     (Chief Financial Officer)<PAGE>