Hallwood Energy Corporation

----- Forwarded by Tana Jones/HOU/ECT on 05/19/2000 09:12 AM -----

John Suttle
05/17/2000 04:36 PM

To: Brant Reves/HOU/ECT@ECT, Frank L Davis/HOU/ECT@ECT, Tana
Jones/HOU/ECT@ECT
cc:
Subject: Hallwood Energy Corporation

EOL Team,

Please approve the above mentioned for online trading for financial oil and
gas in the U.S. only.

We have a Master Swap contract with these guys, and they are an ESP.
However, their exposure is well above the contractual threshold ($6.5MM
credit line versus $12MM exposure) and we are not collateralized for the
amount of exposure above the credit line. So, as a result, we want to
approve them for online trading, but we actually do not want them to be able
to complete any transactions. The counterparty has requested approval, and
Fred Lagrasta has asked that we approve them so they can get online and see
the stacks. Credit does not want them to complete trades, so we need to set
a very low credit line for online trading so when the counterparty attempts
to trade (if they attempt to trade), is turned down.

If this is not possible, please ket me know so I can get back with Fred and
the counterparty.

Thanks,

John