Hallwood Energy Corporation Announces Completion of Consolidation.

DENVER--(BUSINESS WIRE)--June 8, 1999--

Hallwood Energy Corporation (NASDAQ: HECO; HECOP) announced today that it has completed its previously announced consolidation, pursuant to which Hallwood Energy Partners, L.P. and Hallwood Consolidated Resources Corporation have been consolidated and the energy interests of The Hallwood Group Incorporated (NYSE: HWG) have been acquired. The common and preferred shares of Hallwood Energy Corporation will begin trading regular way on NASDAQ on Wednesday, June 9, 1999. Information regarding the delivery of certificates representing the newly issued shares will be sent to all registered shareholders within 14 days.

The consolidation creates an exploration and production company with estimated pro forma 1998 year-end reserves of approximately 213 billion cubic feet of natural gas equivalent (bcfe). Combined pro forma production for the first quarter of 1999 is estimated to be approximately 8.0 bcfe, 75% of which is natural gas. After completing the transaction, Hallwood Energy Corporation has, at December 31, 1998, on a pro forma basis, total assets of approximately $205,000,000, subject to total debt of approximately $98,000,000. The transaction will be accounted for using the purchase method.

As a result of the consolidation, Hallwood Energy Corporation will be larger than Hallwood Energy Partners or Hallwood Consolidated Resources Corporation and will have a greater number of stockholders and greater equity capitalization. The consolidation will also simplify the structure of the entity and reduce ongoing expenses.

Anthony J. Gumbiner will be Chairman and Chief Executive Officer and William L. Guzzetti will be President and Chief Operating Officer of Hallwood Energy Corporation.

Hallwood Energy Corporation's principal objectives are to explore for, develop, acquire and produce oil and gas properties. Hallwood Energy Corporation is based in Denver, Colorado with properties primarily located in South Louisiana, the San Juan Basin in New Mexico and Colorado, West Texas and the Rocky Mountain Region.

This press release may contain projections and other forward-looking statements within the meaning of federal securities laws. Any such projections or statements reflect the Company's current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that such projections will be achieved and actual results could differ materially from those projected. A discussion of important factors that could cause actual results to differ materially from those projected is included in the Company's periodic reports filed with the Securities and Exchange Commission. Such factors include, among others, risks inherent in exploration activities generally, and uncertainties regarding future oil and gas prices and the availability of capital.