EXTENSION OF MANAGEMENT AGREEMENT This Extension of Management Agreement dated May 5, 1998 is between Hallwood Petroleum, Inc. ("HPI") and Hallwood Energy Partners, L.P. ("HEP"). Whereas, HPI and HEP are parties to a Management Agreement dated May 5,...

                        EXTENSION OF MANAGEMENT AGREEMENT

     This  Extension  of  Management  Agreement  dated  May 5,  1998 is  between
Hallwood Petroleum, Inc. ("HPI") and Hallwood Energy Partners, L.P. ("HEP").

     Whereas,  HPI and HEP are parties to a  Management  Agreement  dated May 5,
1997, and

     Whereas,  the  Management  Agreement  provided  that it may be extended for
successive one year terms by written agreement of the parties, and

     Whereas, the parties desire to extend the Management Agreement until May 5,
1999,

     Now, therefore, in consideration of the mutual agreements contained herein,
the parties agree that the term of the  Management  Agreement is extended to May
5, 1999.


                                   HALLWOOD PETROLEUM, INC.


                                   By: /s/Xxxxxxx X. Xxxxxx
                                          Xxxxxxx X. Xxxxxx
                                          Executive Vice President


                                   HALLWOOD ENERGY PARTNERS, L.P.
                                   By: HEPGP Ltd., general partner
                                   By: Hallwood G.P., Inc.


                                   By: /s/Xxxxxxx X. Xxxxxxxx
                                          Xxxxxxx X. Xxxxxxxx
                                          President