Spring is not the only thing currently in the air, as merger andacquisition activity continues at the rapid pace set during 2000.Midland, TX-based Pure Resources Inc. and Denver, CO-based HallwoodEnergy Corp. announced they have signed a definitive mergeragreement in which subsidiary Pure Resources II will acquire all ofthe outstanding shares of Hallwood common stock at a price of$12.50/share.

“This acquisition will expand our core areas in the Permian andSan Juan Basins and in South Texas,” said Jack Hightower, CEO ofPure Resources. “It will also increase our already strong projectinventory and enhance Pure Resource’s ability to grow productionthrough exploitation and exploration. We expect the transaction tobe immediately accretive to earnings and cash flow per share.Hallwood is a highly regarded company and is a great strategic fitwith our goal of growing our North American natural gas business.”

Pure Resources placed the total consideration for thetransaction at approximately $268 million, including assumed debt.Both boards of directors have already unanimously approved thedeal. The merger is subject to numerous conditions, including thereceipt of a majority of Hallwood’s outstanding common andpreferred stock.

Bill Guzzetti, President of Hallwood stated “Pure Resources’offer will provide our stockholders with a premium cash value andimmediate liquidity for their holdings at prices well in excess ofthe highest levels at which either the common or the preferredstock has traded. We feel that the offer reflects the proven andpotential value of Hallwood. We are very proud of our company’saccomplishments and believe that Pure Resources’ offer isindicative of our success.”

Pure Resources is an independent oil and gas exploration andproduction company operating in the Permian Basin, the San JuanBasin, the Gulf Coast and the Gulf of Mexico. Hallwood, a publicoil and gas company, is primarily involved in the Permian Basin,the San Juan Basin, South Texas and onshore South Louisiana.

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