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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-K

(Mark One)

|    |  |                                                                                     
|--- |  | ------------------------------------------------------------------------------------
|[X] |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

OR

|     |  |                                                                                         
|---- |  | ----------------------------------------------------------------------------------------
|[  ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934



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Commission file number: 001-11335

Dominion Resources Black Warrior Trust


(Exact name of registrant as specified in its charter)


|                                                                        |  |                                                   
|----------------------------------------------------------------------- |  | --------------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 75-6461716
(I.R.S. employer
identification number)

Trust Division
Royalty Trust Group
Bank of America, N.A.
901 Main Street
17th Floor
Dallas, Texas 75202
(Address of principal executive offices;
Zip Code)

Registrants telephone number, including area code:
(214) 209-2400

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

|                             |  |                                          
|---------------------------- |  | -----------------------------------------
|Title of Each Class          |  | Name of Each Exchange on
Which Registered
|                             |  |                                          
|Units of Beneficial Interest |  | New York Stock Exchange, Inc.            

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

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 [X] No
[  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

Indicate by a check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [X] No [  ]

The aggregate market value of the registrants units of beneficial
interest outstanding (based on the closing sale price on the New York Stock
Exchange) held by non-affiliates of the registrant as of the last business day
of the registrants most recently completed second fiscal quarter was
approximately $219,000,000.

At March 1, 2004, there were 7,850,000 units of beneficial interest
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.





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TABLE OF CONTENTS



|                                                   |                                                                                              |                                   |                                                                   |  |  |  |  | 
|-------------------------------------------------- | -------------------------------------------------------------------------------------------- | --------------------------------- | ----------------------------------------------------------------- |  |  |  |  | 
|PART I                                            
|                                                   | Item 1. Business.                                                                           
|                                                   |                                                                                              | GLOSSARY                         
|                                                   |                                                                                              | DESCRIPTION OF THE TRUST         
|                                                   |                                                                                              |                                   | Creation and Organization of the Trust                           
|                                                   |                                                                                              |                                   | Assets of the Trust                                              
|                                                   |                                                                                              |                                   | Duties and Limited Powers of the Trustee and the Delaware Trustee
|                                                   |                                                                                              |                                   | Resignation of Trustees                                          
|                                                   |                                                                                              |                                   | Transfer of Royalty Interests                                    
|                                                   |                                                                                              |                                   | Liabilities of the Trust                                         
|                                                   |                                                                                              |                                   | Liabilities of the Trustee and the Delaware Trustee              
|                                                   |                                                                                              |                                   | Termination and Liquidation of the Trust                         
|                                                   |                                                                                              |                                   | Arbitration and Actions by Unitholders                           
|                                                   |                                                                                              | DESCRIPTION OF UNITS             
|                                                   |                                                                                              |                                   | Distributions and Income Computations                            
|                                                   |                                                                                              |                                   | Conditional Right of Repurchase                                  
|                                                   |                                                                                              |                                   | Possible Divestiture of Units                                    
|                                                   |                                                                                              |                                   | Periodic Reports                                                 
|                                                   |                                                                                              |                                   | Voting Rights of Unitholders                                     
|                                                   |                                                                                              |                                   | Liability of Unitholders                                         
|                                                   |                                                                                              |                                   | Transfer Agent                                                   
|                                                   |                                                                                              |                                   | Website/SEC Filings                                              
|                                                   |                                                                                              | FEDERAL INCOME TAX CONSIDERATIONS
|                                                   |                                                                                              |                                   | Summary of Certain Federal Income Tax Consequences               
|                                                   |                                                                                              | ERISA CONSIDERATIONS             
|                                                   |                                                                                              | STATE TAX CONSIDERATIONS         
|                                                   |                                                                                              |                                   | Alabama Income Tax                                               
|                                                   |                                                                                              |                                   | Alabama Business Privilege Tax                                   
|                                                   |                                                                                              |                                   | Alabama Severance Taxes                                          
|                                                   |                                                                                              |                                   | Other Alabama Taxes                                              
|                                                   |                                                                                              | REGULATION AND PRICES            
|                                                   |                                                                                              |                                   | Regulation of Natural Gas                                        
|                                                   |                                                                                              |                                   | Environmental Regulation                                         
|                                                   |                                                                                              |                                   | Competition, Markets and Prices                                  
|                                                   | Item 2. Properties                                                                          
|                                                   |                                                                                              | THE ROYALTY INTERESTS            
|                                                   |                                                                                              |                                   | The Underlying Properties                                        
|                                                   |                                                                                              |                                   | The Royalty Interests                                            
|                                                   |                                                                                              |                                   | Reserve Estimate                                                 
|                                                   |                                                                                              |                                   | Natural Gas Sales Prices and Production                          
|                                                   |                                                                                              |                                   | Gas Purchase Agreement                                           
|                                                   |                                                                                              |                                   | Operation of Properties                                          
|                                                   |                                                                                              |                                   | Sale and Abandonment of Underlying Properties                    
|                                                   |                                                                                              |                                   | Dominion Resourcess Assurances                                  
|                                                   |                                                                                              |                                   | Title to Properties                                              
|                                                   | Item 3. Legal Proceedings                                                                   
|                                                   | Item 4. Submission of Matters to a Vote of Security Holders                                 
|PART II                                           
|                                                   | Item 5. Market for Registrants Common Equity and Related Stockholder Matters               
|                                                   | Item 6. Selected Financial Data                                                             
|                                                   | Item 7. Trustees Discussion and Analysis of Financial Condition and Results of Operations  
|                                                   |                                                                                              |                                   | Critical Accounting Policies and Estimates                       
|                                                   |                                                                                              |                                   | Liquidity and Capital Resources                                  
|                                                   |                                                                                              |                                   | Off-Balance Sheet Arrangements                                   
|                                                   |                                                                                              |                                   | Tabular Disclosure of Contractual Obligations                    
|                                                   |                                                                                              |                                   | Forward-Looking Statements                                       
|                                                   | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                         
|                                                   | Item 8. Financial Statements and Supplementary Data                                         
|                                                   | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|                                                   | Item 9A. Controls and Procedures                                                            
|PART III                                          
|                                                   | Item 10. Directors and Executive Officers of the Registrant                                 
|                                                   | Item 11. Executive Compensation                                                             
|                                                   | Item 12. Security Ownership of Certain Beneficial Owners and Management                     
|                                                   | Item 13. Certain Relationships and Related Transactions                                     
|                                                   |                                                                                              |                                   | Administrative Services Agreement                                
|                                                   |                                                                                              |                                   | Dominion Resourcess Conditional Right of Repurchase             
|                                                   |                                                                                              |                                   | Potential Conflicts of Interest                                  
|                                                   | Item 14. Principal Accounting Fees and Services                                             
|PART IV                                           
|                                                   | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                    
|                                                   |                                                                                              |                                   | 1. Financial Statements                                          
|                                                   |                                                                                              |                                   | 2. Financial Statement Schedules                                 
|                                                   |                                                                                              |                                   | 3. Exhibits                                                      
|                                                   |                                                                                              |                                   | (b) Reports on Form 8-K                                          
|SIGNATURES                                        
|Index to Exhibits                                 
|Consent of Ralph E. Davis Associates, Inc.        
|Certification Required by Rule 13a-14(a)/15d-14(a)
|Certification Required by Rule 13a-14(b)/15d-14(b)
|Summary of Reserve Report                         



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TABLE OF CONTENTS

|        |  |                                                                                    |  |  |    |                                   |                                                                   |  |      |    | 
|------- |  | ---------------------------------------------------------------------------------- |  |  | -- | --------------------------------- | ----------------------------------------------------------------- |  | ---- | -- | 
|        |  |                                                                                    |  |  |    |                                   |                                                                   |  | Page
|        |  |                                                                                    |  |  |    |                                   |                                                                   |  |     
|PART I  |  |                                                                                    |  |  | 1  |                                  
|Item 1. |  | Business                                                                           |  |  | 1  |                                  
|        |  |                                                                                    |  |  |    | GLOSSARY                          |                                                                   |  | 1    |   
|        |  |                                                                                    |  |  |    | DESCRIPTION OF THE TRUST          |                                                                   |  | 4    |   
|        |  |                                                                                    |  |  |    |                                   | Creation and Organization of the Trust                            |  |      | 4  | 
|        |  |                                                                                    |  |  |    |                                   | Assets of the Trust                                               |  |      | 4  | 
|        |  |                                                                                    |  |  |    |                                   | Duties and Limited Powers of the Trustee and the Delaware Trustee |  |      | 4  | 
|        |  |                                                                                    |  |  |    |                                   | Resignation of Trustees                                           |  |      | 5  | 
|        |  |                                                                                    |  |  |    |                                   | Transfer of Royalty Interests                                     |  |      | 5  | 
|        |  |                                                                                    |  |  |    |                                   | Liabilities of the Trust                                          |  |      | 5  | 
|        |  |                                                                                    |  |  |    |                                   | Liabilities of the Trustee and the Delaware Trustee               |  |      | 6  | 
|        |  |                                                                                    |  |  |    |                                   | Termination and Liquidation of the Trust                          |  |      | 6  | 
|        |  |                                                                                    |  |  |    |                                   | Arbitration and Actions by Unitholders                            |  |      | 7  | 
|        |  |                                                                                    |  |  |    | DESCRIPTION OF UNITS              |                                                                   |  | 9    |   
|        |  |                                                                                    |  |  |    |                                   | Distributions and Income Computations                             |  |      | 9  | 
|        |  |                                                                                    |  |  |    |                                   | Conditional Right of Repurchase                                   |  |      | 10 | 
|        |  |                                                                                    |  |  |    |                                   | Possible Divestiture of Units                                     |  |      | 10 | 
|        |  |                                                                                    |  |  |    |                                   | Periodic Reports                                                  |  |      | 11 | 
|        |  |                                                                                    |  |  |    |                                   | Voting Rights of Unitholders                                      |  |      | 11 | 
|        |  |                                                                                    |  |  |    |                                   | Liability of Unitholders                                          |  |      | 12 | 
|        |  |                                                                                    |  |  |    |                                   | Transfer Agent                                                    |  |      | 12 | 
|        |  |                                                                                    |  |  |    |                                   | Website/SEC Filings                                               |  |      | 12 | 
|        |  |                                                                                    |  |  |    | FEDERAL INCOME TAX CONSIDERATIONS |                                                                   |  | 13   |   
|        |  |                                                                                    |  |  |    |                                   | Summary of Certain Federal Income Tax Consequences                |  |      | 13 | 
|        |  |                                                                                    |  |  |    | ERISA CONSIDERATIONS              |                                                                   |  | 18   |   
|        |  |                                                                                    |  |  |    | STATE TAX CONSIDERATIONS          |                                                                   |  | 19   |   
|        |  |                                                                                    |  |  |    |                                   | Alabama Income Tax                                                |  |      | 19 | 
|        |  |                                                                                    |  |  |    |                                   | Alabama Business Privilege Tax                                    |  |      | 19 | 
|        |  |                                                                                    |  |  |    |                                   | Alabama Severance Taxes                                           |  |      | 20 | 
|        |  |                                                                                    |  |  |    |                                   | Other Alabama Taxes                                               |  |      | 20 | 
|        |  |                                                                                    |  |  |    | REGULATION AND PRICES             |                                                                   |  | 20   |   
|        |  |                                                                                    |  |  |    |                                   | Regulation of Natural Gas                                         |  |      | 20 | 
|        |  |                                                                                    |  |  |    |                                   | Environmental Regulation                                          |  |      | 21 | 
|        |  |                                                                                    |  |  |    |                                   | Competition, Markets and Prices                                   |  |      | 21 | 
|Item 2. |  | Properties                                                                         |  |  | 23 |                                  
|        |  |                                                                                    |  |  |    | THE ROYALTY INTERESTS             |                                                                   |  | 23   |   
|        |  |                                                                                    |  |  |    |                                   | The Underlying Properties                                         |  |      | 23 | 
|        |  |                                                                                    |  |  |    |                                   | The Royalty Interests                                             |  |      | 25 | 
|        |  |                                                                                    |  |  |    |                                   | Reserve Estimate                                                  |  |      | 26 | 
|        |  |                                                                                    |  |  |    |                                   | Natural Gas Sales Prices and Production                           |  |      | 27 | 
|        |  |                                                                                    |  |  |    |                                   | Gas Purchase Agreement                                            |  |      | 27 | 
|        |  |                                                                                    |  |  |    |                                   | Operation of Properties                                           |  |      | 28 | 
|        |  |                                                                                    |  |  |    |                                   | Sale and Abandonment of Underlying Properties                     |  |      | 28 | 
|        |  |                                                                                    |  |  |    |                                   | Dominion Resourcess Assurances                                   |  |      | 29 | 
|        |  |                                                                                    |  |  |    |                                   | Title to Properties                                               |  |      | 29 | 
|Item 3. |  | Legal Proceedings                                                                  |  |  | 29 |                                  
|Item 4. |  | Submission of Matters to a Vote of Security Holders                                |  |  | 30 |                                  
|PART II |  |                                                                                    |  |  | 30 |                                  
|Item 5. |  | Market for Registrants Common Equity and Related Stockholder Matters              |  |  | 30 |                                  
|Item 6. |  | Selected Financial Data                                                            |  |  | 30 |                                  
|Item 7. |  | Trustees Discussion and Analysis of Financial Condition and Results of Operations |  |  | 31 |                                  
|        |  |                                                                                    |  |  |    |                                   | Critical Accounting Policies and Estimates                        |  |      | 33 | 
|        |  |                                                                                    |  |  |    |                                   | Liquidity and Capital Resources                                   |  |      | 34 | 
|        |  |                                                                                    |  |  |    |                                   | Off-Balance Sheet Arrangements                                    |  |      | 34 | 
|        |  |                                                                                    |  |  |    |                                   | Tabular Disclosure of Contractual Obligations                     |  |      | 35 | 

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|         |  |                                                                                      |  |  |    |  |                                                      |  |      |    | 
|-------- |  | ------------------------------------------------------------------------------------ |  |  | -- |  | ---------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                      |  |  |    |  |                                                      |  | Page
|         |  |                                                                                      |  |  |    |  |                                                      |  |     
|         |  |                                                                                      |  |  |    |  | Forward-Looking Statements                           |  |      | 35 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                           |  |  | 35 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                          |  |  | 36 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure |  |  | 45 | 
|Item 9A. |  | Controls and Procedures                                                              |  |  | 45 | 
|PART III |  |                                                                                      |  |  | 45 | 
|Item 10. |  | Directors and Executive Officers of the Registrant                                   |  |  | 45 | 
|Item 11. |  | Executive Compensation                                                               |  |  | 45 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                       |  |  | 46 | 
|Item 13. |  | Certain Relationships and Related Transactions                                       |  |  | 46 | 
|         |  |                                                                                      |  |  |    |  | Administrative Services Agreement                    |  |      | 46 | 
|         |  |                                                                                      |  |  |    |  | Dominion Resourcess Conditional Right of Repurchase |  |      | 47 | 
|         |  |                                                                                      |  |  |    |  | Potential Conflicts of Interest                      |  |      | 47 | 
|Item 14. |  | Principal Accounting Fees and Services.                                              |  |  | 48 | 
|PART IV  |  |                                                                                      |  |  | 48 | 
|Item 15. |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                      |  |  | 48 | 
|         |  |                                                                                      |  |  |    |  | Financial Statements                                 |  |      | 48 | 
|         |  |                                                                                      |  |  |    |  | Financial Statement Schedules                        |  |      | 48 | 
|         |  |                                                                                      |  |  |    |  | Exhibits                                             |  |      | 48 | 
|         |  |                                                                                      |  |  |    |  | Reports on Form 8-K                                  |  |      | 49 | 

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PART I




Item 1. Business




GLOSSARY

The following is a glossary of certain defined terms used in this Annual
Report on Form 10-K.

Administrative Services Agreement means the Administrative Services
Agreement dated as of June 28, 1994, between Dominion Resources and the
Trust, a copy of which is filed as an exhibit to this Form 10-K.

Bcf means billion cubic feet of natural gas.

Btu means British Thermal Unit, the common unit of gross heating value
measurement for natural gas.

Code means the Internal Revenue Code of 1986, as amended.

Company means Dominion Black Warrior Basin, Inc., an Alabama
corporation and a wholly-owned indirect subsidiary of Dominion Resources.

Company Interests means the Companys interest in the Underlying
Properties, as of June 1, 1994, not burdened by the Royalty Interests.

Company Interests Owner means the Company while it owns all or part of
the Company Interests and any other person or persons who acquire all or any
part of the Company Interests or any operating rights therein other than a
royalty, overriding royalty, production payment or net profits interest.

ConocoPhillips means ConocoPhillips Corporation, successor to The
River Gas Corporation.

Contract Price means the price at which, pursuant to the Gas Purchase
Agreement, El Paso Merchant Energy - Gas, L.P., as successor to Sonat
Marketing, is obligated to purchase the Subject Gas at the central delivery
points in the gathering system for the Underlying Properties. Pursuant to a
Gas Purchase Agreement amendment, effective January 1, 2001 through December
31, 2001, the Contract Price for each month equaled (a) for quantities of Gas
equal to or less than 25% of the Monthly Base Quantity, $3.97 per MMBtu, (b)
for quantities of Gas over and above 25% of the Monthly Base Quantity up to
75% of the Monthly Base Quantity, the sum of the Index Price and Premium,
which Price could not be less than a floor of $3.00 per MMBtu and could not
be greater than a ceiling of $5.30 per MMBtu, (c) for quantities of Gas over
and above 75% of the Monthly Base Quantity up to the Monthly Base Quantity,
the sum of the Index Price and Premium, and (d) for quantities of Gas in
excess of the Monthly Base Quantity, the sum of the Index Price and $0.02 per
MMBtu. Pursuant to a Gas Purchase Agreement amendment, effective January 1,
2002 through December 31, 2002, the Contract Price for each month equaled (a)
for quantities of Gas up to and including the applicable Monthly Fixed Price
Quantity, $3.70 per MMBtu, and (b) for quantities of Gas over and above the
Monthly Fixed Price Quantity up to the Monthly Base Quantity, the sum of (i)
the Index Price and (ii) a premium per MMBtu, ranging from $.05 to $.07,
multiplied by 0.9826, the wet/dry conversion factor. Pursuant to that same
Gas Purchase Agreement amendment, commencing January 1, 2002, the Contract
Price for quantities of Gas over and above the Monthly Base Quantity equaled
the sum of (i) the Index Price and (ii) $.02 per MMBtu, multiplied by 0.9826,
the wet/dry conversion factor. Pursuant to the same Gas Purchase Agreement
amendment, commencing January 1, 2003, the price for quantities up to and
including the Monthly Base Quantity shall be the sum of (i) the Index Price
and (ii) a premium per MMBtu, ranging from $.05 to $.07, multiplied by
0.9826, the wet/dry conversion factor. Pursuant to the July 1, 2002 Gas
Purchase Agreement amendment, effective January 1, 2003, the price payable by
El Paso for each MMBtu of Gas produced up to and including the applicable
monthly specified base quantity during each month shall be divided into two
categories, a Fixed Price Quantity and an Index Price Quantity (as defined
therein). Until December 31, 2003, the price payable by El Paso for each
MMBtu of Gas produced up to and including the applicable monthly Fixed Price
Quantity shall be $3.68 per MMBtu. The price payable by El Paso for each
MMBtu of gas produced in excess of the applicable monthly Fixed Price
Quantity and up to and including the applicable monthly Index Price Quantity
shall be the sum of (i) the Index Price and (ii) a premium per MMBtu, ranging
from $.05 to $.07, multiplied by 0.9826, the wet/dry conversion factor.
Commencing January 1, 2004, the pricing formula for the Index Price Quantity
described in the immediately preceding sentence shall apply to the entire
Monthly Base

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Quantity. Also effective January 1, 2004, the price payable by
El Paso for gas production in excess of
the specified Monthly Base Quantity each month shall be the sum of the
Index Price and $.02 per MMBtu, multiplied by 0.9826, the wet/dry conversion
factor. Prices are subject to negotiation and arbitration at the request of
either party if they are unable to reach agreement. Effective January 31,
2004, the Gas Purchase Agreement was terminated. Effective February 1, 2004,
Gas will be sold on a month to month basis to various purchasers until such
time as a long-term contract can be secured.

Conveyance means the Overriding Royalty Conveyance dated effective as
of June 1, 1994, from the Company to the Trust, as amended by instrument
dated as of November 20, 1994, copies of which are filed as exhibits to this
Form 10-K.

Delaware Trustee means Mellon Bank (DE) National Association.

Dominion Resources means Dominion Resources, Inc., a Virginia
corporation.

El Paso means El Paso Merchant Energy-Gas, L.P., successor to Sonat
Marketing Company.

Existing Wells means the wells producing on the Underlying Properties
as of June 1, 1994.

Gas means natural gas produced and sold from the Underlying
Properties.

Gas Purchase Agreement means the Gas Purchase Agreement dated as of
May 3, 1994, between the Company and El Paso, as successor to Sonat
Marketing, as amended by instruments effective as of April 1, 1996, May 16,
1996, April 9, 1998, July 1, 1999, July 1, 2000, July 1, 2001 and July 1,
2002.

Gross Proceeds means the aggregate amounts received by the Company
Interests Owner attributable to the Company Interests from the sale of
Subject Gas at the central delivery points in the gathering system for the
Underlying Properties.

Gross Wells means the total whole number of gas wells without regard
to ownership interest.

Index Price means the price published by Inside FERC Gas Market Report
in its first issue of the month which posts prices for the beginning of such
month for Prices of Spot Gas Delivered to Pipelines    Southern Natural
Gas Co.  Louisiana  Index, for such month.

Mcf means thousand cubic feet of natural gas. Natural gas volumes are
stated herein at the legal pressure base of 14.65 or 14.73 pounds per square
inch absolute, as the case may be, at 60 degrees Fahrenheit.

MMcf means million cubic feet of natural gas. As used herein, 1 MMcf
is assumed to have a Btu content of 1004 MMBtu.

MMBtu means million Btu. As used herein, 996 MMBtu is deemed to be the
Btu content of 1 MMcf.

Monthly Base Quantity means the volumes of natural gas designated as
such in the Gas Purchase Agreement.

Monthly Fixed Price Quantity means the volumes of natural gas
designated as such from time to time in the Gas Purchase Agreement.

Net revenue interest means working interest or mineral interest less
any applicable royalties, overriding royalties or similar burdens on
production prior to the Royalty Interests.

Net wells and net acres are calculated by multiplying gross wells or
gross acres by the ownership interest in such wells or acres.

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Prospectus means the prospectus dated June 21, 1994, as supplemented
by the final prospectus supplement dated June 1, 1995, relating to the offer
and sale of the Units, and forming a part of Dominion Resourcess
Registration Statement on Form S-3 (No. 33-53513).

Ralph E. Davis & Associates means Ralph E. Davis & Associates,
independent petroleum engineers.

Reserve Estimate means the estimated net proved reserves, estimated
future net revenues and the discounted estimated future net revenues
attributable to the Royalty Interests as of January 1, 2004, prepared by
Ralph E. Davis & Associates.

Royalty Interests means the overriding royalty interests conveyed to
the Trust pursuant to the Conveyance entitling the holder thereof to 65
percent of the Gross Proceeds derived from the Company Interests.

Section 29 tax credit means the tax credits for federal income tax
purposes pursuant to Section 29 of the Code to an owner of coal seam gas
production, which tax credits are generated upon the sale of such production.

Sonat Marketing means Sonat Marketing Company, a Delaware Corporation.

Subject Gas means Gas attributable to the Company Interests.

Trust means Dominion Resources Black Warrior Trust, a Delaware
business trust formed pursuant to the Trust Agreement.

Trust Agreement means the Trust Agreement dated as of May 31, 1994,
among the Company, as grantor, Dominion Resources, the Delaware Trustee and
the Trustee, as amended by instrument dated as of June 27, 1994, copies of
which are filed as exhibits to this Form 10-K.

Trustee means Bank of America, N.A., as successor to NationsBank of
Texas, N.A.

Working interest generally refers to the lessees interest in an oil,
gas or mineral lease which entitles the owner to receive a specified
percentage of oil and gas production, but requires the owner of such working
interest to bear such specified percentage of the costs to explore for,
develop, produce and market such oil and gas.

Underlying Properties means the natural gas properties in which the
Company has an interest located in the Black Warrior Basin, Tuscaloosa
County, Alabama insofar as such properties include the Pottsville Formation.

Units means the 7,850,000 units of beneficial interest issued by, and
evidencing the entire beneficial interest in, the Trust.

3



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##### Table of Contents






DESCRIPTION OF THE TRUST

Dominion Resources Black Warrior Trust is a Delaware business trust
formed under the Delaware Business Trust Act, Title 12, Chapter 38 of the
Delaware Code, Section 3801 et seq. (the Delaware Code). The following
information is subject to the detailed provisions of the Trust Agreement and
the Conveyance, copies of which are filed as exhibits to this Form 10-K. The
provisions governing the Trust are complex and extensive, and no attempt has
been made below to describe or reference all of such provisions. The
following is a general description of the basic framework of the Trust and
the material provisions of the Trust Agreement.




Creation and Organization of the Trust

The Trust was initially created by the filing of its Certificate of
Trust with the Delaware Secretary of State on May 31, 1994. In accordance
with the Trust Agreement, the Company contributed $1,000 as the initial
corpus of the Trust. On June 28, 1994, the Royalty Interests were conveyed
to the Trust by the Company pursuant to the Conveyance, in consideration for
the issuance to the Company of all 7,850,000 of the authorized Units in the
Trust. The Company transferred all the Units to its parent, Dominion Energy,
Inc., a Virginia corporation (Dominion Energy), which in turn transferred
all the Units to its parent, Dominion Resources. Dominion Resources sold an
aggregate of 6,904,000 Units to the public through various underwriters (the
Underwriters) in June and August 1994 in the initial public offering of the
Units (the Initial Public Offering) and sold the remaining 946,000 Units to
the public through certain of the Underwriters in June 1995 pursuant to
Post-Effective Amendment No. 1 to the Form S-3 Registration Statement
relating to the Units (the Secondary Public Offering and, collectively with
the Initial Public Offering, the Public Offerings).




Assets of the Trust

The only assets of the Trust, other than cash and temporary investments
being held for the payment of expenses and liabilities and for distribution
to Unitholders, are the Royalty Interests. The Royalty Interests consist of
overriding royalty interests burdening the Companys interest in the
Underlying Properties. The Royalty Interests generally entitle the Trust to
receive 65 percent of the Companys Gross Proceeds. The Royalty Interests
are non-operating interests and bear only expenses related to property,
production and related taxes (including severance taxes). See
PropertiesThe Royalty Interests.

The Company has advised the Trustee that all the production attributable
to the Underlying Properties is from the Pottsville coal formation and is
coal seam gas that entitled the owners of such production to tax credits
pursuant to Section 29 of the Code upon the production and sale of such gas
before January 1, 2003, provided certain requirements were satisfied. See
Federal Income Tax Considerations.




Duties and Limited Powers of the Trustee and the Delaware Trustee

Under the Trust Agreement, the Trustee has all powers to collect the
payments attributable to the Royalty Interests and to pay all expenses,
liabilities and obligations of the Trust. The Trustee has the discretion to
establish a cash reserve for the payment of any liability that is contingent
or uncertain in amount or that otherwise is not currently due and payable.
The Trustee is entitled to cause the Trust to borrow money from any source,
including from the entity serving as Trustee (provided that the entity
serving as Trustee shall not be obligated to lend to the Trust), to pay
expenses, liabilities and obligations that cannot be paid out of cash held by
the Trust. To secure payment of any such indebtedness (including any
indebtedness to the Trustee), the Trustee is authorized to (i) mortgage and
otherwise encumber the entire Trust estate or any portion thereof; (ii) carve
out and convey production payments; (iii) include all terms, powers,
remedies, covenants and provisions it deems necessary or advisable, including
confession of judgment and the power of sale with or without judicial
proceedings; and (iv) provide for the exercise of those and other remedies
available to a secured lender in the event of a default on such loan. The
terms of such indebtedness and security interest, if funds were loaned by the
Trustee, must be similar to the terms that the Trustee would grant to a
similarly-situated commercial customer with whom it did not have a fiduciary
relationship, and the Trustee shall be entitled to enforce its rights with
respect to any such indebtedness and security interest as if it were not then
serving as Trustee.

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The Delaware Trustee has only such powers as are set forth in the Trust
Agreement or are required by law and is not empowered to take part in the
management of the Trust.

The Royalty Interests are passive in nature and neither the Trustee nor
the Delaware Trustee has any control over or any responsibility relating to
the operation of the Underlying Properties. The Company does not have any
contractual commitment to the Trust to develop further the Underlying
Properties or to maintain its ownership interest in any of the Underlying
Properties. The Company may sell the Company Interests subject to and
burdened by the Royalty Interests and, absent certain conditions having been
met, with the continuing benefit of Dominion Resourcess assurances and the
Gas Purchase Agreement. For a description of the Underlying Properties, the
Royalty Interests and other information relating to such properties, see
PropertiesThe Royalty Interests.

The Trust Agreement authorizes the Trustee to take such action as in its
judgment is necessary, desirable or advisable to best achieve the purposes of
the Trust. The Trustee is empowered by the Trust Agreement to employ
consultants and agents (including the Company, Dominion Energy and Dominion
Resources) and to make payments of all fees for services or expenses out of
the assets of the Trust. The Trustee is authorized to agree to modifications
of the terms of the Conveyance and to settle disputes with respect thereto,
so long as such modifications or settlements do not result in the treatment
of the Trust as an association taxable as a corporation for federal income
tax purposes and such modifications or settlements do not alter the nature of
the Royalty Interests as a right to receive a share of production or the
proceeds of production from the Underlying Properties, which, with respect to
the Trust, are free of any operating rights, expenses or obligations. The
Trust Agreement provides that cash being held by the Trustee as a reserve for
liabilities or for distribution at the next distribution date will be placed
in demand deposit accounts, U.S. government obligations, repurchase
agreements secured by such obligations or certificates of deposit, but the
Trustee is otherwise prohibited from acquiring any asset other than the
Royalty Interests and cash proceeds therefrom or engaging in any business or
investment activity of any kind whatsoever. The Trustee may deposit funds
awaiting distribution in an account with the Trustee provided the interest
rate paid equals the interest rate paid by the Trustee on similar deposits.

The Trust has no employees. Administrative functions are performed by
the Trustee.




Resignation of Trustees

The Trustee and the Delaware Trustee may resign at any time upon 60
days prior written notice or be removed, with or without cause, by a vote of
not less than a majority of the outstanding Units, provided in each case that
a successor trustee has been appointed and has accepted its appointment. Any
successor must be a bank or trust company meeting certain requirements,
including having capital, surplus and undivided profits of at least
$100,000,000, in the case of the Trustee, and $20,000,000, in the case of the
Delaware Trustee.




Transfer of Royalty Interests

Prior to the termination of the Trust, the Trustee is not authorized to
sell or otherwise dispose of all or any part of the Royalty Interests. The
Trustee is authorized and directed to sell and convey the Royalty Interests
without Unitholder approval upon termination of the Trust. No Unitholder
approval for sales or dispositions upon termination is required even though
they may constitute a disposition of all or substantially all the assets of
the Trust. Any sales upon termination may be made to Dominion Resources or
its affiliates. See Termination and Liquidation of the Trust.




Liabilities of the Trust

Because of the passive nature of the Trust assets and the restrictions
on the activities of the Trustee, the only liabilities the Trust has incurred
are those for routine administrative expenses, such as trusteeship fees and
accounting, engineering, legal and other professional fees and the
administrative services fee paid to Dominion Resources. If a court were to
hold that the Trust is taxable as a corporation, then the Trust would incur
substantial federal income tax liabilities. See also State Tax
ConsiderationsAlabama Franchise Tax.

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Liabilities of the Trustee and the Delaware Trustee

Each of the Trustee and the Delaware Trustee may act in its discretion
and is personally or individually liable only for fraud or acts or omissions
in bad faith or that constitute gross negligence (and for taxes, fees and
other charges on, based on or measured by any fees, commissions or
compensation received pursuant to the Trust Agreement) and will not be
otherwise liable for any act or omission of any agent or employee unless such
Trustee has acted in bad faith or with gross negligence in the selection and
retention of such agent or employee. Each of the Trustee and the Delaware
Trustee (and their respective agents) is indemnified by Dominion Resources
and from the Trust assets for certain environmental liabilities, and for any
other liability, expense, claim, damage or other loss incurred in performing
its duties, unless resulting from gross negligence, fraud or bad faith (each
of the Trustee and the Delaware Trustee is indemnified from the Trust assets
against its own negligence that does not constitute gross negligence), and
will have a first lien upon the assets of the Trust as security for such
indemnification and for reimbursements and compensation to which it is
entitled; provided that the Trustee and the Delaware Trustee are generally
required to first be indemnified from the Trust assets before seeking
indemnification from Dominion Resources. Dominion Resources also has agreed
to indemnify the Trustee and the Delaware Trustee against liabilities under
certain securities laws. Neither the Trustee nor the Delaware Trustee is
entitled to indemnification from Unitholders (except in connection with lost
or destroyed Unit certificates). Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended (the Securities Act),
is permitted to the Trustee pursuant to the foregoing provisions, the Trustee
has been informed that in the opinion of the Securities and Exchange
Commission (the Commission), such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable.




Termination and Liquidation of the Trust

The Trust will terminate upon the occurrence of: (i) an affirmative vote
of the holders of not less than 66     percent of the outstanding Units to
terminate the Trust; (ii) such time as the ratio of the cash amounts received
by the Trust attributable to the Royalty Interests in any calendar quarter to
administrative costs of the Trust for such calendar quarter is less than 1.2
to 1.0 for two consecutive calendar quarters; or (iii) March 1 of any year if
it is determined, based on a reserve report as of December 31 of the prior
year prepared by a firm of independent petroleum engineers mutually selected
by the Trustee and the Company, that the net present value (discounted at 10
percent) of (a) estimated future net revenues from proved reserves
attributable to the Royalty Interests plus (b) the amount of all remaining
Section 29 tax credits attributable to the Royalty Interests, is equal to or
less than $5 million (as applicable, the Termination Date). As discussed
in Description of UnitsFederal Income Tax Considerations, coal seam gas
produced and sold after December 31, 2002, will no longer generate a Section
29 tax credit unless the Section 29 tax credit is extended or reinstated by
Congress. Upon such occurrence causing the Trust to terminate, the remaining
assets of the Trust will be sold, the net proceeds of the sale will be
distributed to Unitholders and the Trust will be wound up and a certificate
of cancellation filed.

Upon the termination of the Trust, the Trustee will use its best efforts
to sell any remaining Royalty Interests then owned by the Trust for cash
pursuant to the procedures described in the Trust Agreement. The Trustee
will retain a nationally recognized investment banking firm (the Advisor)
on behalf of the Trust who will assist the Trustee in selling the remaining
Royalty Interests. The Company has the right, but not the obligation, within
60 days following the Termination Date, to make a cash offer to purchase all
of the remaining Royalty Interests then held by the Trust. In the event such
an offer is made by the Company, the Trustee will decide, based on the
recommendation of the Advisor, to either (i) accept such offer (in which case
no sale to the Company will be made unless a fairness opinion is given by the
Advisor that the purchase price is fair to Unitholders) or (ii) defer action
on the offer for approximately 60 days and seek to locate other buyers for
the remaining Royalty Interests. If the Trustee defers action on the
Companys offer, the offer will be deemed withdrawn and the Trustee will then
use its best efforts, assisted by the Advisor, to locate other buyers for the
Royalty Interests. At the end of the 120-day period following the
Termination Date, the Trustee is required to notify the Company of the
highest of any other offers acceptable to the Trustee (which must be an
all-cash offer) received during such period (such price, net of any
commissions or other fees payable by the Trust, the Highest Acceptable
Offer). The Company then has the right (whether or not it made an initial
offer), but not the obligation, to purchase all remaining Royalty Interests
for a cash purchase price computed as follows: (i) if the Highest Acceptable
Offer is more than 105 percent of the Companys original offer (or if the
Company did not make an initial offer), the purchase price will be 105
percent of the Highest Acceptable Offer, or (ii) if the Highest Acceptable
Offer is equal to or less than 105 percent of the Companys original offer,
the purchase price will be equal to the Highest Acceptable Offer. If no
other acceptable offers

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are received for all remaining Royalty Interests, the
Trustee may request the Company to submit another offer for consideration by
the Trustee and may accept or reject such offer.

If a sale of the Royalty Interests is made or a definitive contract for
sale of the Royalty Interests is entered into within a 150-day period
following the Termination Date, the buyer of the Royalty Interests, and not
the Trust or Unitholders, will be entitled to all proceeds of production
attributable to the Royalty Interests following the Termination Date.

In the event that the Company does not purchase the Royalty Interests,
the Trustee may accept any offer for all or any part of the Royalty Interests
as it deems to be in the best interests of the Trust and Unitholders and may
continue, for up to one calendar year after the Termination Date, to attempt
to locate a buyer or buyers of the remaining Royalty Interests in order to
sell such interests in an orderly fashion. If the Royalty Interests have not
been sold or a definitive agreement for sale has not been entered into by the
end of such calendar year, the Trustee is required to sell the remaining
Royalty Interests at a public auction, which sale may be to the Company or
any of its affiliates.

The Companys purchase rights, as described above, may be exercised by
the Company and each of its successors in interest and assigns. The
Companys purchase rights are fully assignable by the Company to any person
or entity. The costs of liquidation, including the fees and expenses of the
Advisor and the Trustees liquidation fee, will be paid by the Trust.

The Trust may terminate without Unitholder approval. Unitholders are not
entitled to any rights of appraisal or similar rights in connection with the
termination of the Trust.




Arbitration and Actions by Unitholders

Pursuant to the Trust Agreement, any dispute, controversy or claim that
may arise between or among Dominion Resources or the Company, on the one
hand, and the Trustee, the Delaware Trustee or the Trust, on the other hand,
in connection with or otherwise relating to the Trust Agreement or the
Conveyance or the application, implementation, validity or breach thereof or
any provision thereof, shall be settled by final and binding arbitration in
Dallas, Texas in accordance with the Rules of Practice and Procedure for the
arbitration of commercial disputes of Judicial Arbitration & Mediation
Services, Inc. (or any successor thereto) then in effect. The Administrative
Services Agreement also includes a provision that will require Dominion
Resources and the Trustee and the Trust to submit any dispute regarding such
contract to alternative dispute resolution before litigating such matter.

The Trust Agreement requires under certain circumstances that the
Trustee and the Trust pursue any claims against Dominion Resources and the
Company with respect to any breach by Dominion Resources and the Company of
the terms of the Conveyance or the Trust Agreement (and requires that any
such claims be brought in arbitration), without the joinder of any
Unitholder. The Trust Agreement does not provide for any procedure allowing
Unitholders to bring an action on their own behalf to enforce the rights of
the Trust under the Conveyance and, except in the case of the failure of the
Trustee to enforce certain performance obligations of Dominion Resources to
the Trust, does not provide for any procedure allowing Unitholders to direct
the Trustee to bring an action on behalf of the Trust to enforce the Trusts
rights under the Conveyance. Each Unitholder has a statutory right, however,
under Section 3816 of the Delaware Code to bring a derivative action in the
Delaware Court of Chancery on behalf of the Trust to enforce the rights of
the Trust if the Trustee has refused to bring the action or if an effort to
cause the Trustee to bring the action is not likely to succeed. The
procedures for the arbitration of disputes enumerated in the Trust Agreement
neither bar nor restrict the statutory right of any Unitholder under Section
3816 of the Delaware Code to bring a derivative action.

Pursuant to Section 3816 of the Delaware Code, a plaintiff in a
derivative action must be a beneficial owner at the time such action is
brought and (i) at the time of the transaction subject to such complaint or
(ii) the Unitholders status as a beneficial owner must have devolved upon it
by operation of law or pursuant to the terms of the governing instrument of
the Trust from a person or entity who was a beneficial owner at the time of
the transaction giving rise to the complaint. If a derivative action is
successful, in whole or in part, or if anything is received by the Trust as a
result of a judgment, compromise or settlement of any such action, the
Delaware Chancery Court may award the plaintiff reasonable expenses,
including reasonable attorneys fees. If any award is so received by the
plaintiff, the Delaware Chancery Court will make such award of the
plaintiffs expenses payable out of those proceeds and direct the plaintiff
to remit to the Trust the remainder thereof. If the proceeds are
insufficient to reimburse the plaintiffs reasonable expenses in bringing the

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derivative action, the Delaware Chancery Court may direct that any such award
of the plaintiffs expenses or a portion thereof be paid by the Trust. The
rights of Unitholders to bring a derivative action on behalf of the Trust
provided pursuant to the Trust Agreement and Section 3816 of the Delaware
Code are substantially
similar to the derivative rights afforded stockholders under Section 327
of Chapter 8 of the Delaware General Corporation Law and applicable Delaware
case law.

In the event that any Unitholder was successful in bringing a derivative
action on behalf of the Trust to enforce rights on behalf of the Trust
against Dominion Resources or the Company, then such Unitholder could, on
behalf of the Trust, pursue such rights against Dominion Resources or the
Company, as the case may be, in the Delaware Chancery Court. The Trust
Agreement does not require, and expressly provides that it shall not be
construed to require, arbitration of a claim or dispute solely between the
Trustee and the Delaware Trustee or of any claim or dispute brought by any
person or entity, including, without limitation, any Unitholder (whether in
its own right or through a derivative action in the right of the Trust) who
is not a party to the Trust Agreement.

The right of a Unitholder to bring a derivative action on behalf of the
Trust with respect to Dominion Resourcess obligation to cure certain
deficiencies under the Trust Agreement is subject to the restriction that
such right may only be exercised by Unitholders owning of record not less
than 25 percent of the Units then outstanding (treated as a single class) and
then only absent action by the Trustee to enforce any such obligation within
10 days following receipt by the Trustee of a written request served upon the
Trustee by such Unitholders to take such action. In such an event,
Unitholders owning of record not less than 25 percent of the Units then
outstanding may, acting as a single class and on behalf of the Trust, seek to
enforce such obligations. See PropertiesThe Royalty InterestsDominion
Resourcess Assurances.

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DESCRIPTION OF UNITS

Each Unit represents an equal undivided share of beneficial interest in
the Trust and is evidenced by a transferable certificate issued by the
Trustee. Each Unit entitles its holder to the same rights as the holder of
any other Unit, and the Trust has no other authorized or outstanding class of
equity security. At March 1, 2004, there were 7,850,000 Units outstanding.
The Trust may not issue additional Units.




Distributions and Income Computations

The Trustee determines for each calendar quarter the amount of cash
available for distribution to Unitholders. Such amount (the Quarterly
Distribution Amount) is equal to the excess, if any, of the cash received by
the Trust attributable to production from the Royalty Interests during such
calendar quarter, provided that such cash is received by the Trust on or
before the last business day prior to the 45th day following the end of such
calendar quarter, plus the amount of interest expected by the Trustee to be
earned on such cash proceeds during the period between the date of receipt by
the Trust of such cash proceeds and the date of payment to the Unitholders of
such Quarterly Distribution Amount, plus all other cash receipts of the Trust
during such calendar quarter (to the extent not distributed or held for
future distribution as a Special Distribution Amount (as defined herein) or
included in the previous Quarterly Distribution Amount) (which might include
sales proceeds not sufficient in amount to qualify for a special
distribution, as described in the next paragraph, and interest), over the
liabilities of the Trust paid during such calendar quarter and not taken into
account in determining a prior Quarterly Distribution Amount, subject to
adjustments for changes made by the Trustee during such calendar quarter in
any cash reserves established for the payment of contingent or future
obligations of the Trust. An amount that is not included in the Quarterly
Distribution Amount for a calendar quarter because such amount is received by
the Trust after the last business day prior to the 45th day following the end
of such calendar quarter shall be included in the Quarterly Distribution
Amount for the next calendar quarter. The Quarterly Distribution Amount for
each calendar quarter will be payable to Unitholders of record on the 60th
day following the end of such calendar quarter, unless such day is not a
business day in which case the record date will be the next business day
thereafter. The Trustee will distribute the Quarterly Distribution Amount
for each calendar quarter on or prior to 70 days after the end of such
calendar quarter to each person who was a Unitholder of record on the record
date for such calendar quarter.

The Royalty Interests will be sold in whole or in part upon termination
of the Trust. Any proceeds from sales of the Royalty Interests, plus any
interest expected by the Trustee to be earned thereon, less liabilities and
expenses of the Trust and amounts used for cash reserves, will be distributed
to Unitholders of record on the record date established for such
distribution. A special distribution will be made of undistributed cash
proceeds and other amounts received by the Trust aggregating in excess of
$10,000,000, plus the amount of interest expected by the Trustee to be earned
on such cash proceeds during the period between the date of receipt by the
Trust of such cash proceeds and the date of payment to the Unitholders of
such special distribution (a Special Distribution Amount). The record date
for distribution of a Special Distribution Amount will be the 15th day
following receipt of amounts aggregating a Special Distribution Amount by the
Trust (unless such day is not a business day in which case the record date
will be the next business day thereafter) unless such day is within 10 days
prior to the record date for a Quarterly Distribution Amount in which case
the record date will be the date as is established for the next Quarterly
Distribution Amount. Distributions to Unitholders will be no later than 15
days after the Special Distribution Amount record date.

Gross income attributable to cash being distributed in most cases will
be reported for federal income tax purposes by the Unitholder who receives
such distributions assuming that such Unitholder is the owner of record on
the applicable record date. In certain circumstances, however, a Unitholder
will not receive the cash giving rise to such income. For example, the
Trustee maintains a cash reserve, and is authorized to borrow money under
certain conditions, in order to pay or provide for the payment of Trust
liabilities. Income associated with the cash used to increase that reserve
or to repay that loan must be reported by the Unitholder, even though that
cash is not distributed to him. Likewise, if a portion of a cash
distribution is attributable to a reduction in the cash reserve maintained by
the Trustee, such cash is treated as a reduction to the Unitholders basis in
his Units and is not treated as taxable income to such Unitholder (assuming
such Unitholders basis exceeds the amount of the cash distribution).

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Conditional Right of Repurchase

Dominion Resources (and any of its successors and affiliates) has the
right to repurchase all (but not less than all) outstanding Units at any time
at which 15 percent or less of the outstanding Units are owned by persons or
entities other than Dominion Resources and its affiliates. Subject to the
following sentence, any such repurchase would be at a price equal to the
greater of (i) the highest price at which Dominion Resources or any of its
affiliates acquired Units during the 90 days immediately preceding the date
(the Determination Date) that is 3 New York Stock Exchange (NYSE) trading
days prior to the date on which notice of such exercise is delivered to the
Unitholders and (ii) the average closing price of Units on the NYSE for the
30 trading days immediately preceding the Determination Date. If Dominion
Resources or any of its affiliates acquires Units (other than an acquisition
from Dominion Resources or any affiliate) during the period that is 3 NYSE
trading days after the Determination Date at a price per Unit greater than
that at which an acquisition was made during the 90-day period referred to in
clause (i) of the preceding sentence, then for purposes of clause (i) of the
preceding sentence the highest price used therein will be such greater price.
Any such repurchase would be conducted in accordance with applicable federal
and state securities laws.

In the event that Dominion Resources elects to purchase all Units,
Dominion Resources and the Trustee will, prior to the date fixed for
purchase, give all Unitholders of record not less than 15 days nor more than
60 days written notice specifying the time and place of such repurchase,
calling upon each such Unitholder to surrender to Dominion Resources on the
repurchase date at the place designated in such notice its certificate or
certificates representing the number of Units specified in such notice of
repurchase. On or after the repurchase date, each holder of Units to be
repurchased must present and surrender its certificates for such Units to
Dominion Resources at the place designated in such notice and thereupon the
purchase price of such Units will be paid to or on the order of the person or
entity whose name appears on such certificate or certificates as the owner
thereof. In no event may fewer than all of the outstanding Units represented
by the certificates be repurchased (except for any Units held by Dominion
Resources and any of its affiliates).

If Dominion Resources and the Trustee give a notice of repurchase and
if, on or before the date fixed for repurchase, the funds necessary for such
repurchase are set aside by Dominion Resources, separate and apart from its
other funds in trust for the pro rata benefit of the holders of the Units so
noticed for repurchase, then, notwithstanding that any certificate for such
Units has not been surrendered, at the close of business on the repurchase
date the holders of such Units shall cease to be Unitholders and shall have
no interest in or claims against Dominion Resources, the Company, the Trust,
the Delaware Trustee or the Trustee by virtue thereof and shall have no
voting or other rights with respect to such Units, except the right to
receive the purchase price payable upon such repurchase, without interest
thereon and without any other distributions for record dates after the date
of notice of repurchase, upon surrender (and endorsement, if required by
Dominion Resources) of their certificates, and the Units evidenced thereby
shall no longer be held of record in the names of such Unitholders. Subject
to applicable escheat laws, any monies so set aside by Dominion Resources and
unclaimed at the end of 2 years from the repurchase date shall revert to the
general funds of Dominion Resources. After such reversion, the holders of
such Units so noticed for repurchase could look only to the general funds of
Dominion Resources for the payment of the purchase price. Any interest
accrued on funds so deposited would be paid to Dominion Resources from time
to time as requested by Dominion Resources.

If Dominion Resources exercises and consummates its right of repurchase,
then, at its option, it may cause the Trust to be terminated by providing
written notice thereof to the Trustee and the Delaware Trustee. Within 30
days following written notice of Dominion Resourcess decision to terminate
the Trust, the Trustee must cause any remaining Royalty Interests (and,
subject to the rights of Unitholders with respect to the receipt of
distributions for which a record date has been determined, all proceeds of
production attributable to the Royalty Interests) and any other assets of the
Trust to be conveyed to Dominion Resources or its assignee (subject to the
right of such trustees to create reasonable reserves in connection with the
liquidation of the Trust).




Possible Divestiture of Units

The Trust Agreement imposes no restrictions based on nationality or
other status of Unitholders. The Trust Agreement provides, however, that in
the event of certain judicial or administrative proceedings seeking the
cancellation or forfeiture of any property in which the Trust has an
interest, or asserting the invalidity of, or otherwise challenging any
portion of the Royalty Interests because of the nationality, citizenship or
any other status of any one or more Unitholders, the Trustee will give
written notice thereof to each Unitholder whose nationality, citizenship or
other status is an issue in

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the proceeding, which notice will constitute a
demand that such Unitholder dispose of his Units within 30 days. If any
Unitholder fails to dispose of his Units in accordance with such notice, the
Trustee will cancel all outstanding certificates issued in the name of such
Unitholder, transfer all Units held by such Unitholder to
the Trustee and sell such Units (including by private sale). The
proceeds of such sale (net of sales expenses), pending delivery of
certificates representing the Units, will be held by the Trustee in a
non-interest bearing account for the benefit of the Unitholder and paid to
the Unitholder upon surrender of such certificates. Cash distributions
payable to such Unitholder will also be held in a non-interest bearing
account pending disposition by the Unitholder of the Units or cancellation of
certificates representing the Units by the Trustee, subject to a maximum
retention period of 2 years or such shorter period as shall be permitted by
applicable laws.




Periodic Reports

The Trustee causes a reserve report to be prepared for the Trust (by a
firm of independent petroleum engineers mutually selected by the Trustee and
the Company) each year showing estimated proved natural gas reserves and
other reserve information attributable to the Royalty Interests as of
December 31 of such year. Such reserve reports show estimated future net
revenues and the net present value (discounted at 10 percent) of the
estimated future net revenues (using the year-end market or Contract Price as
of December 31 as appropriate) from proved reserves attributable to the
Royalty Interests. The costs of the reserve reports are paid by the Trust
and constitute an administrative expense. The Trustee also provides to
Dominion Resources and the Company, within 15 days after the end of each
calendar quarter, a written itemized report showing all administrative costs
of the Trust paid during such quarter.

Within 75 days following the end of each of the first three calendar
quarters of each calendar year, the Trustee mails to each person or entity
who was a Unitholder of record (i) on the record date for each such calendar
quarter and (ii) on a Special Distribution Amount record date occurring
during such quarter, if any, a report showing in reasonable detail the
assets, liabilities, receipts and disbursements of the Trust for such
calendar quarter. Within 120 days following the end of each fiscal year, the
Trustee mails to Unitholders of record as of a date to be selected by the
Trustee an annual report containing audited financial statements, including
reserve information relating to the Trust and the Royalty Interests.

The Trustee files such returns for federal income tax purposes as it is
advised are required to comply with applicable law. The Trustee mails to
each person or entity who was a Unitholder of record (i) on the record date
for each such calendar quarter and (ii) on a Special Distribution Amount
record date occurring during such quarter, if any, a report that shows in
reasonable detail information to permit each Unitholder to make all
calculations reasonably necessary for tax purposes. The Trustee treats all
income, credits and deductions recognized during each calendar quarter during
the term of the Trust as having been recognized by holders of record on the
quarterly record date established for the distribution unless otherwise
advised by counsel. Available year-end tax information permitting each
Unitholder to make all calculations reasonably necessary for tax purposes is
distributed by the Trustee to Unitholders no later than March 15 of the
following year.

Each Unitholder and his duly authorized agents and attorneys have the
right during reasonable business hours, and upon reasonable prior notice, to
examine and inspect records of the Trust and the Trustee and the Delaware
Trustee.




Voting Rights of Unitholders

While Unitholders have certain voting rights as provided in the Trust
Agreement, such rights differ from and are more limited than those of
stockholders of a corporation for profit. For example, there is no
requirement for annual meetings of Unitholders or for annual or other
periodic reelection of the Trustee.

Meetings of Unitholders may be called by the Trustee or by Unitholders
owning not less than 10 percent of the outstanding Units. In addition, the
Delaware Trustee may call such a meeting but only for the purpose of
appointing a successor to it upon its resignation. All meetings of
Unitholders will be held in Dallas, Texas. Written notice of every such
meeting setting forth the time and place of the meeting and the matters
proposed to be acted upon will be given not more than 60 days nor less than
20 days before such meeting is to be held to all of the Unitholders of record
at the close of business on a record date selected by the Trustee, which
record date will not be more than 60 days before the date of such meeting.
The presence in person or by proxy of Unitholders representing a majority of
the outstanding Units is necessary

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to constitute a quorum. Each Unitholder
is entitled to one vote for each Unit owned by such Unitholder. The Trustee
will call such meetings to consider amendments, waivers, consents and other
changes relating to the Conveyance, if requested in writing by the Company or
Dominion Resources. No matter other than that stated
in the notice of the Unitholder meeting will be voted on and no action
by the Unitholders may be taken without a meeting.

Generally, amendments to the Trust Agreement require approval of a
majority of the outstanding Units (except that amendments of required voting
percentages requires approval of at least 80 percent of the outstanding
Units), but no provision of the Trust Agreement may be amended that would (i)
increase the power of the Trustee or the Delaware Trustee to engage in
business or investment activities or (ii) alter the rights of the Unitholders
as among themselves. Without the written consent of Dominion Resources and
the approval of not less than 66 2/3 percent of the outstanding Units, no
provision of the Trust Agreement may be amended with respect to (a) the sale
or disposition of all or any part of the Trust estate, including the Royalty
Interests, except as specifically provided in the Trust Agreement; (b)
termination of the Trust and the disposition of Trust assets upon liquidation
of the Trust; or (c) the Companys right of first refusal with respect to the
purchase of any remaining Royalty Interests upon termination of the Trust.
Without the written consent of Dominion Resources and the approval of a
majority of the outstanding Units, no amendment may be made to the Trust
Agreement that would alter Dominion Resourcess conditional right to
repurchase all outstanding Units at any time at which 15 percent or less of
the outstanding Units is owned by persons or entities other than Dominion
Resources or its affiliates. Additionally, any amendment that increases the
obligations, duties or liabilities of or affects the rights of the Trustee or
the Delaware Trustee must be consented to by such entity. The Trustee, the
Delaware Trustee, Dominion Resources and the Company may, without approval of
Unitholders, from time to time supplement or amend the Trust Agreement in
order to cure any ambiguity or to correct or supplement any defective or
inconsistent provisions, provided such supplement or amendment is not adverse
to the interests of Unitholders. In addition, (i) Dominion Resources may
direct the Trustee to change the name of the Trust without approval of
Unitholders and (ii) in the event that a business purpose of the Trust is
found or deemed to exist by any taxing or other authority on which finding
any taxation authority might rely, the Trustee is authorized to amend or
delete and, subject to the receipt of an opinion of counsel reasonably
satisfactory to the Trustee, the Trustee, the Delaware Trustee, Dominion
Resources and the Company will amend or delete any provision of the Trust
Agreement or take such other action as may be necessary to eliminate such
business purpose, without approval of Unitholders. Removal of the Trustee
and the Delaware Trustee, approval of amendments, waivers, consents and other
changes relating to the Conveyance and the approval of the merger or
consolidation of the Trust into one or more entities require approval of a
majority of the outstanding Units. Except as set forth under Description of
the TrustTermination and Liquidation of the Trust, all other actions may be
approved by a majority vote of the Units represented at a meeting at which a
quorum is present or represented.




Liability of Unitholders

Consistent with Delaware law, the Trust Agreement provides that
Unitholders will have the same limitation on liability as is accorded under
Delaware law to stockholders of a corporation for profit. No assurance can
be given, however, that the courts in jurisdictions outside of Delaware will
give effect to such limitation.




Transfer Agent

Mellon Investor Services, L.L.C. (as successor to Chemical Shareholder
Services Group, Inc.) serves as transfer agent and registrar for the Units.




Website/SEC Filings

The Trust maintains an Internet Website at
www.dom-dominionblackwarriortrust.com, and will provide website access to its
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and amendments to such reports as soon as reasonably practicable
after such material is filed with or furnished to the SEC.

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FEDERAL INCOME TAX CONSIDERATIONS

THE TAX CONSEQUENCES TO A UNITHOLDER OF THE OWNERSHIP AND SALE OF UNITS
WILL DEPEND IN PART ON THE UNITHOLDERS TAX CIRCUMSTANCES. EACH UNITHOLDER
SHOULD THEREFORE CONSULT THE UNITHOLDERS TAX ADVISOR ABOUT THE FEDERAL,
STATE AND LOCAL TAX CONSEQUENCES TO THE UNITHOLDER OF THE OWNERSHIP OF UNITS.

The sections entitled Federal Income Tax Consequences and Risk
FactorsTax Considerations appearing in the Prospectus set forth,
respectively, a discussion of the material federal income tax matters of
general application of the acquisition, ownership and sale of the Units
acquired in the Public Offerings and a discussion of certain risk factors
associated with matters of federal income taxation as applied to the Trust
and such Unitholders. A copy of such sections of the Prospectus is filed as
an exhibit to this Form 10-K and is incorporated herein by reference.

In connection with the registration of the Units for offer and sale in
the Public Offerings, Dominion Resources and the Underwriters received
certain opinions of special counsel (Special Counsel) to Dominion Resources
(upon which the Trustee and the Delaware Trustee were entitled to rely),
including, without limitation, opinions as to the material federal income tax
consequences of the ownership and sale of the Units acquired in either of the
Public Offerings. Each of these opinions was based on provisions of the Code
existing as of June 28, 1994, with respect to the opinions given in
connection with the Initial Public Offering, and as of June 8, 1995, with
respect to the opinions given in connection with the Secondary Public
Offering, and existing and proposed regulations thereunder, administrative
rulings and court decisions as of such dates, all of which are subject to
changes that may or may not be retroactively applied. Some of the applicable
provisions of the Code have not been interpreted by the courts or the
Internal Revenue Service (IRS). In addition, such opinions were based on
various representations as to factual matters made by the Company and
Dominion Resources in connection with the Public Offerings. In addition,
such opinions were expressly limited in their application to investors
purchasing Units in each of such Public Offerings and, as a result, provide
no assurance to investors not purchasing Units in one of the Public
Offerings.

Neither the Trustee, the Delaware Trustee, nor counsel to the Trustee,
respectively, has rendered any opinions with respect to any tax matters
associated with the Trust or the Units.

At the time of the Public Offerings, no ruling was requested by Dominion
Resources, as the sponsor of the Trust, the Trustee or the Delaware Trustee
from the IRS with respect to any matter affecting the Trust or Unitholders.
No assurance can be provided that the opinions of Special Counsel (which do
not bind the IRS) will not be challenged by the IRS or will be sustained by a
court if so challenged.




Summary of Certain Federal Income Tax Consequences

The following summary of certain federal income tax consequences of
acquiring, owning and disposing of Units is based on the opinions of Special
Counsel to Dominion Resources on federal income tax matters, which are set
forth in the Prospectus, and is qualified in its entirety by express
reference to the sections of the Prospectus identified in the first paragraph
of this Federal Income Tax Considerations section. Although the Trustee
believes that the following summary contains a description of all of the
material matters discussed in the opinions referenced above, the summary is
not exhaustive and many other provisions of the federal tax laws may affect
individual Unitholders. Furthermore, the summary does not purport to be
complete or address the tax issues potentially affecting Unitholders
acquiring Units other than by purchase through either of the Public
Offerings. Each Unitholder should consult the Unitholders tax advisor with
respect to the effects of the Unitholders ownership of Units on the
Unitholders personal tax situation.

Coal seam gas produced and sold after December 31, 2002 will no longer
generate Section 29 tax credits unless the Section 29 tax credit is extended
or reinstated by Congress. Nevertheless, the Section 29 tax credit may be
available to Unitholders with respect to the first quarter of 2003 because,
among other reasons, it is attributable to coal seam gas produced and sold on
or before December 31, 2002. The Trustee is seeking a private letter ruling
from the IRS on this issue. All discussions of Section 29 tax credits are
applicable only to those credits attributable to coal seam gas produced and
sold on or before December 31, 2002.

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|                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Classification and Taxation of the
Trust |  | The Trust is a grantor trust and not an association taxable as a
corporation. As a grantor trust, the Trust is not subject to federal
income tax. There can be no assurance that the IRS will not challenge
this treatment. The tax treatment of the Trust and Unitholders would
be
materially different if the IRS were to
successfully challenge this treatment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Limits on Deductions and Credits         |  | Generally, a taxpayer is entitled to
claim deductions and tax credits
generated by an investment only if the
investment has economic substance.
The application of this principle in
the context of the production and sale
of nonconventional fuels (like coal
seam gas) that generated the Section
29 tax credit is uncertain because
such application has not been
addressed either by a court or the
IRS. An investment has economic
substance if the investor can
demonstrate that there is a reasonable
possibility of deriving an economic
profit from the investment in excess
of a de minimis amount, apart from tax
benefits. In many cases, economic
profit has been computed by comparing
the taxpayers total cash investment
to the total cash reasonably expected
to be received by the taxpayer as a
result of the investment (a Pre-Tax
Profit Objective). At the time of
the Public Offerings, Special Counsel
to Dominion Resources expressed the
opinion (only in connection with the
Public Offerings) that the ownership
of Units purchased in either of the
Public Offerings, which ownership is
not subject to puts, calls or other
risk allocation devices, has economic
substance even if the owner has no
Pre-Tax Profit Objective. No
assurance is given either by the
Trustee or counsel to the Trustee to a
purchaser of Units in or following the
Public Offerings as to whether (and to
what extent) such purchaser is or will
be entitled to claim deductions and
the Section 29 tax credit generated
with respect to such Units.
|                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Taxation of Unitholders                  |  | Each Unitholder is taxed directly on
his proportionate share of income,
deductions and credits of the Trust
attributable to the Royalty Interests
consistent with each such Unitholders
taxable year and method of accounting
and without regard to the taxable year
or method of accounting employed by
the Trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Income and Deductions                    |  | The income of the Trust consists
primarily of a specified share of the
proceeds from the sale of coal seam
gas produced from the Underlying
Properties. During 2003, the Trust
earned interest income on funds held
for distribution and made adjustments
to the cash reserve maintained for the
payment of contingent and future
obligations of the Trust. The
deductions of the Trust consist of
severance taxes and administrative
expenses. In addition, each
Unitholder is entitled to depletion
deductions. See Unitholders
Depletion Allowance below                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                         |  | Individuals may deduct miscellaneous itemized
deductions (including, in general, investment
expenses) only to the extent that such expenses
exceed 2 percent of the individuals adjusted
gross income. Although there are exceptions to
the 2 percent limitation, authority suggests
that no exceptions apply to expenses passed
through from a grantor trust, like the Trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Section 29 Tax Credits                   |  | Unitholders are entitled, provided certain
requirements are met, to claim tax credits pursuant to Section 29 of the
Code with respect to sales before January 1, 2003, of coal seam gas
production attributable to the Royalty Interests and produced from the
Existing Wells, the gross income from                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | which is included in their taxable
income. The Section 29 tax credit provides a taxpayer a
dollar-for-dollar reduction in his regular federal income tax liability
and, therefore, generally provides him a greater benefit than a
deduction, which merely reduces the amount of his taxable income.
Unitholders will not be entitled to the Section 29 tax credit for
distributions received in the last three quarters of 2003. The Section
29 tax credit may be available to Unitholders for distributions received
in the first quarter of 2003 because, among other reasons, it is
attributable to coal seam gas produced and sold on or before December
31, 2002. Allowing Unitholders to take Section 29 tax credits on their
2003 tax returns for coal seam gas produced and sold in the fourth
quarter of 2002 is consistent with how Unitholders have reported the
income and Section 29 tax credits from fourth quarter production
throughout the life of the Trust. Such reporting matches the income
recognition with the associated credits. Therefore, the Trust believes
that Unitholders should be entitled to take the Section 29 tax credit
amount on their 2003 tax returns.
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | To confirm that Unitholders may take the Section
29 tax credit amount reported herein on their
2003 tax returns, the Trust has filed a private
letter ruling request with the IRS. This ruling
request is pending. Therefore, the Trust does
not yet know whether the IRS agrees that
Unitholders may report the Section 29 tax credit
amount reported herein
on their 2003 tax return. The IRS may take the
position that Unitholders may not take the
Section 29 tax credit on their 2003 tax returns
because Unitholders did not receive the income
attributable to fourth quarter 2002 production
until 2003, after the Section 29 tax credit had
expired. Once the IRS issues a ruling, the
Trustee will notify Unitholders as promptly as
possible.                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Unitholders may choose to file their tax returns
before the IRS issues its ruling or to file an
extension of time to file their returns while
the ruling request is pending. An extension of
time to file, however, is not an extension of
time to pay tax. Therefore, if Unitholders
choose to take the Section 29 tax credit when
calculating their 2003 tax liability and an
adverse ruling is subsequently issued or the
pending ruling request is withdrawn because the
IRS notifies the Trust that it expects to issue
an adverse ruling, Unitholders may be liable for
additional tax, penalties, and interest. If
Unitholders choose not to take the Section 29
tax credit when calculating their 2003 tax
liability and a favorable ruling is subsequently
issued, Unitholders may take the Section 29 tax
credit on their original returns, if filed
thereafter, or on an amended return and claim a
refund for any overpayment of tax resulting from
the allowance of the Section 29 tax credit.                                                                                                                                                                                     
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | Section 29 tax credit information is reported
herein only for the first quarter of 2003.
For a Unitholder who owned Units of record on the first quarterly record
date of 2003, the available Section 29 tax credit (if allowed) is
approximately $0.203285 per Unit, based on the first estimate of the GNP
implicit price deflator published by the Bureau of Economic Analysis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | The availability of Section 29 tax credits is
dependent upon meeting a number of requirements,
many of which are factual in nature. The
Company and Dominion Resources represented only
in connection with the Public Offerings that
those factual requirements were met. At the
time of each of the Public Offerings, Special
Counsel opined as to those requirements that are
statutory or legal in nature. If any of the
factual requirements are not met, or the opinion
not followed, some or all of the expected
Section 29 tax credits may not be available.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|---------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                     |  | Production from coal seam gas wells drilled
after December 31, 1979 and prior to January 1,
1993, qualifies for the Section 29 tax credit,
so long as the wells are certified by the
Federal Energy Regulatory Commission (FERC).
For a discussion of the well certification
requirement and its impact on the wells included
within the Underlying Properties, see Note 3 to
the Financial Statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Limits on Unitholders Use of
Section 29 Tax Credits |  | The Section 29 tax credit is based on the
Unitholders pro rata share of qualifying production. It can be used
only to the extent that a Unitholders regular tax liability exceeds
the Unitholders tentative minimum tax liability after the regular tax
liability has been reduced by the foreign tax credit and certain other
nonrefundable personal credits. Any part of the Section 29 tax credit
not allowed for the tax year solely because of this alternative minimum
tax limitation is subject to certain carryover provisions relating to
the alternative minimum tax calculation. Except for the foregoing,
there are no Code provisions that allow for the carryback or
carryforward of Section 29 tax credits in any other circumstances. As
the carryforward of unused Section 29 tax credits is related to the
alternative minimum tax calculation for succeeding years,
carryforwards should be allowed, even if the
Section 29 tax credit is not extended or
reinstated after 2002.                                                 
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Quarterly Allocations of Section 29
Credits          |  | Under the Code, a Unitholder is entitled to Section 29 tax credits
only to the extent that he is an owner of the economic interest at the
time the coal seam gas was produced. The Trustee allocates the income
received by the Trust for a quarter, and the Section 29 tax credit
allocable to such income, to Unitholders of record on the quarterly
record date for such quarter. Such an allocation may be challenged by
the IRS, but any challenge is likely to have a material adverse effect
only if successful and only for Unitholders who do not own Units for a
full quarter for each record date, particularly Unitholders who acquire
Units shortly before a record date and sell shortly after a record
date. At the time of each of the Public Offerings, Special Counsel
declined to express an opinion as to whether the IRS would accept
quarterly allocations or would require income, credits and deductions
of the Trust to be determined and allocated daily based on ownership at
the time of production or on some other basis.
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Treatment of the Royalty
Interests                   |  | Each Royalty Interest is a nonoperating
economic interest in an Underlying Property
because it is a right to a fixed percentage
of the gross proceeds from the sale of gas
as, if and when produced from such
properties, the right endures for the
economic life of the burdened reserves and
the right is not required to bear any cost of
developing or producing such gas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Unitholders Depletion
Allowance                     |  | Each Unitholder is entitled to amortize the
cost of the Units through cost depletion over
the life of the Royalty Interests (or, if
greater, through percentage depletion equal
to 15 percent of gross income). If any
portion of the Royalty Interests is treated
as a production payment or is not treated as
an economic interest, however, a Unitholder
will not be entitled to depletion in respect
of such portion. No depletion allowances
were available to Unitholders in respect of
production from the Royalty Interests prior
to June 28, 1994.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

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|                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Depletion Recapture                           |  | If a taxpayer disposes of any section 1254
property (certain oil, gas, geothermal or
other mineral property), and if the adjusted
basis of such property includes adjustments
for deductions for depletion under Section
611 of the Code, the taxpayer generally must
recapture the amount deducted for depletion
in ordinary income (to the extent of gain
realized on the disposition of the property).
This depletion recapture rule applies to any
disposition of property that was placed in
service by the taxpayer after December 31,
1986. Detailed rules set forth in Sections
1.1254-1 through 1.1254-6 of the United
States Treasury regulations govern
dispositions of property after March 13,
1995. The Service will likely take the
position that a Unitholder who purchases a
Unit subsequent to December 31, 1986, must
recapture depletion upon the disposition of
that Unit.         
|                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Non-Passive Activity Income,
Credits and Loss |  | The income, credits and expenses of the Trust
are not taken into account in computing the
passive activity losses and income under
Section 469 of the Code for a Unitholder who
acquires and holds Units as an investment and
did not acquire them in the ordinary course
of a trade or business. Section 29 tax
credits generated by an investment in Units
can be utilized to offset regular tax
liability on income from any source whether
active or passive, subject to other
limitations discussed herein or arising from
the individual tax circumstances of each
Unitholder. See Limits on Unitholders Use
of Credits above.                                                                                                                                                                                                                                                                   
|                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Tax Shelter Registration                      |  | The Trust is registered as a tax shelter,
and its tax shelter registration number is
94-277000355. Issuance of a tax shelter
registration number does not indicate that
the investment in Units or the claimed tax
benefits have been reviewed, examined or
approved by the IRS.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Substantial Understatement Penalty            |  | Section 6662 of the Code imposes a penalty in
certain circumstances for a substantial
understatement of taxes if a taxpayers tax
liability is understated by more than the
greater of (i) 10 percent of the taxes
required to be shown on the return or (ii)
$5,000 ($10,000 for most corporations). The
penalty (which is not deductible) is 20
percent of the understatement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                              |  | Except in the case of understatements
attributable to tax shelter items, which are
subject to special rules discussed below, an
item of understatement will not give rise to the
penalty if: (i) there is or was substantial
authority for the taxpayers treatment of the
item, (ii) all the facts relevant to the tax
treatment of the item are adequately disclosed
on the return or on a statement attached to the
return and there is a reasonable basis for the
tax treatment of such item, or (iii) there is
reasonable cause and the taxpayer acted in good
faith.                                                                                                                                                                                                                                                                                                                            
|                                              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                              |  | In the case of understatements attributable to
tax shelter items by noncorporate taxpayers,
the substantial understatement penalty may be
avoided only if: (i) the taxpayer establishes
that, in addition to having substantial
authority for his position, he reasonably
believed that the treatment claimed was more
likely than not the proper treatment of the
item, or (ii) there is reasonable cause and the
taxpayer acted in good faith. In the case of
understatements attributable to tax shelter
items by corporate taxpayers, effective for
transactions occurring after December 8, 1994,
the substantial authority and reasonable belief
exception does not apply. Accordingly, in a
transaction occurring after December 8, 1994, if
a corporate taxpayer has a substantial
understatement attributable to a tax shelter
item, penalties apply unless the corporate
taxpayer can show

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|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                 |  | reasonable cause and good
faith. For transactions involving corporate
taxpayers and substantial understatements
attributable to tax shelter items occurring
before December 9, 1994, the rules applicable to
noncorporate taxpayers apply. A tax shelter
item is an item (e.g., income, gain, loss,
deduction, credit) attributable to a partnership
or other entity, any investment plan or
arrangement, or any other plan or arrangement,
if a significant purpose of such partnership,
entity, plan or arrangement is the avoidance or
evasion of income tax. For transactions entered
into before August 6, 1997, the relevant
standard is whether tax avoidance or evasion of
income tax was the principal purpose of the
entity, plan, or arrangement.
|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                 |  | No assurance is given either by the Trustee or
counsel to the Trustee as to the possible
application of this penalty or any other
penalties, in part because such application
depends largely upon the individual
circumstances under which the Units were
acquired. As a result, purchasers of Units in
and after the Public Offerings should consult
their personal tax advisors.                                                                                                                                                                                                                                                                                                                                                                             
|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Unitholder Reporting
Information |  | The Trustee furnishes to Unitholders tax information
concerning royalty income, depletion and the Section
29 tax credits on an annual basis. Year-end tax
information is furnished to Unitholders no later than
March 15 of the following year. See third paragraph
under Description of UnitsPeriodic Reports.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                 |  | The amount of the Section 29 tax credit on coal
seam gas is adjusted annually for inflation. In
the spring of each year, the IRS issues a notice
publishing the inflation factor for the
preceding calendar year. The notice issued in
the spring of 2003 states that the calendar year
2002 inflation-adjusted credit applies to the
sales of qualified fuels sold during the 2002
calendar year. If the IRS allows Section 29 tax
credits to be claimed on 2003 tax returns, it is
unknown whether the IRS will issue a notice in
the spring of 2004 with a new inflation factor
or whether the inflation factor published last
year will continue to apply.                                                                                                  
|                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                 |  | The Trustee has used the first estimate of the
GNP implicit price deflator published by the
Bureau of Economic Analysis for calendar year
2003 in determining the amount of the Section 29
tax credit in the schedules included in this
booklet. If the IRS issues a notice with an
inflation factor for calendar year 2003, the
Trustee will furnish Unitholders with such
information in the quarterly report to
Unitholders immediately following the
publication of such information. However, if
such information differs materially from the
Trustees estimate, the Trustee will promptly
mail this information to each Unitholder.                                                                                                                      




ERISA CONSIDERATIONS

The section entitled ERISA Considerations appearing in the Prospectus
sets forth certain information regarding the applicability of the Employee
Retirement Income Security Act of 1974, as amended (ERISA), and the Code to
pension, profit-sharing and other employee benefit plans and to individual
retirement accounts (collectively, Qualified Plans). A copy of this
section of the Prospectus is filed as an exhibit to this Form 10-K and is
incorporated herein by reference.

Due to the complexity of the prohibited transaction rules and the
penalties imposed upon persons involved in prohibited transactions, it is
important that potential Qualified Plan investors consult their counsel
regarding the consequences under ERISA and the Code of their acquisition and
ownership of Units.

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STATE TAX CONSIDERATIONS

THE FOLLOWING IS INTENDED AS A BRIEF SUMMARY OF CERTAIN INFORMATION
REGARDING STATE INCOME TAXES AND OTHER STATE TAX MATTERS AFFECTING THE TRUST
AND UNITHOLDERS. UNITHOLDERS SHOULD THEREFORE CONSULT THE UNITHOLDERS TAX
ADVISOR REGARDING STATE INCOME TAX FILING AND COMPLIANCE MATTERS.




Alabama Income Tax

All revenues attributable to the Royalty Interests are derived from
sources within the State of Alabama. Alabama imposes an income tax on
individuals, corporations (subject to certain exceptions for S corporations)
and certain other entities that are residents of, conduct business in, or
derive income from sources within Alabama. Under general rules of
application, both resident and nonresident Unitholders would be required to
file annual Alabama income tax returns and pay Alabama income taxes with
respect to any income received from the Trust and would be subject to
penalties for failure to comply with those rules.

The Alabama Department of Revenue (the DOR) has issued a letter ruling
that permits the Trust to file a composite income tax return on behalf of
all Unitholders who are not residents of Alabama. The filing of the
composite income tax return and acceptance of the return by DOR will relieve
those nonresident Unitholders of any obligation to file Alabama state income
tax returns. The Trust filed for each of the years 1995-2002 composite
income tax returns with the DOR on behalf of all Nonresident Unitholders
(defined below), and intends to file a composite return for 2003 and each
year thereafter for so long as the composite return does not report any
taxable income for Alabama state income tax purposes. Based on certain
assumptions, the composite income tax return to be filed by the Trust on
behalf of Nonresident Unitholders will show a net taxable loss for 2003.
Accordingly, no Alabama state income tax is due under the 2003 return.

No assurance can be given, however, that the DOR will accept the
assumptions used by the Trust in preparing and filing the composite income
tax return for any year and determining the composite taxable income or loss
thereunder for Alabama state income tax purposes. If all or a portion of
those assumptions are not acceptable to the DOR, the
DOR may require the Trust to recompute and refile one or more composite
income tax returns based on different assumptions acceptable to the DOR. If
the composite income tax return for 2003 (or any other tax year) as initially
filed by the Trust is not accepted as filed by the DOR, the Trust may decide
not to refile a composite income tax return either (i) because the Trust
would have net Alabama taxable income for that year as a result of the
assumptions required by the DOR or (ii) because the refiling of the composite
income tax return imposes an unreasonable burden on the Trust in the judgment
of the Trustee (based on its sole discretion). In that event, each
Nonresident Unitholder would be required to file a separate Alabama state
income tax return and pay any Alabama state income tax due as well as any
penalties and interest due thereon. For purposes of the filing of the
composite income tax return for any taxable year, Nonresident Unitholders
will consist of those Unitholders to whom the Trust has provided an
individualized tax information letter (together with its tax information
booklet) for such tax year that shows a mailing address outside the State of
Alabama. All other Unitholders will be treated by the Trust for purposes of
the filing of the composite income tax return as Resident Unitholders.

The filing of the composite income tax return by the Trust does not
relieve any resident of the State of Alabama or any Resident Unitholder from
the obligation to file an Alabama state income tax return individually (and
pay Alabama state income tax thereon, if any) with respect to the revenues
and expenses attributable to the Royalty Interests. In light of the
foregoing, each Unitholder should consult his tax adviser regarding the
requirements for filing state income tax returns for his state of residence
and Alabama.




Alabama Business Privilege Tax

Alabama previously imposed a franchise tax on domestic corporations and
foreign corporations doing business in Alabama, under a broad definition of
corporation in the state constitution, based on the amount of a
corporations capital employed in the state. In reliance upon the
representations and assumptions set forth in the Prospectus and on a private
letter ruling issued June 10, 1994, by the DOR as to the offering of the
Units, special Alabama tax counsel to the Company opined in connection with
each of the Public Offerings that the Trust was not subject to Alabama
franchise tax. Although the Alabama Commissioner of Revenue has the
authority to revoke retroactively DOR rulings under certain limited
circumstances, special Alabama tax counsel did not believe, based on the
above representations and assumptions, that those

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circumstances existed with
respect to the Companys private letter ruling. Dominion Resources agreed
to indemnify the Trust against any resulting Alabama franchise tax imposed on
the Trust.

The Alabama franchise tax has been repealed and replaced with the
Alabama business privilege tax, which imposes an annual privilege tax on
corporations, limited liability entities, and disregarded entities (as those
terms are statutorily defined in Alabamas tax code) doing business in
Alabama or organized under Alabama law. The DOR issued a revenue ruling in
2002 holding that the business privilege tax applied to a grantor trust. The
DOR had previously issued a revenue ruling holding that the business
privilege tax did not apply to a grantor trust, but that revenue ruling was
revoked. Alabama tax counsel recently advised the Trustee that the Trust has
been subject to the business privilege tax since 2000. The Trustee intends
to comply with its obligations relating to the business privilege tax and
will file the appropriate returns and pay any applicable tax, interest, and
penalties.




Alabama Severance Taxes

Alabama levies severance taxes on the removal of certain natural
resources. Statewide severance taxes are collected from oil, gas, coal,
forest products and iron ore. Additional severance taxes are collected by
certain counties on oil, gas, coal, stone, rock, clay, sand and gravel.
Therefore, the Trust, as owner of the Royalty Interests, bears its
proportionate share of Alabama state and county severance taxes. To the
extent there is an increase in the amount of severance taxes, the cash
distribution amount payable to Unitholders will decrease.




Other Alabama Taxes

The Trust has been structured to cause the Units to be treated as
interests in intangible personal property rather than as interests in real
property for certain Alabama state law purposes, other than income and
business privilege taxation. If the Units are held to be real property or
as interests in real property under the laws of Alabama, Unitholders could be
subject to Alabama probate laws, and estate and similar taxes, whether or not
they are residents of Alabama.




REGULATION AND PRICES




Regulation of Natural Gas

Certain aspects of production, transportation, marketing and sale of
natural gas from the Underlying Properties may be subject to federal and
state governmental regulation, including regulation of transportation tariffs
charged by pipelines, taxes, the prevention of waste, the conservation of
natural gas, pollution controls and various other matters.

Sales of natural gas produced from the Underlying Properties are
considered to be sold at the wellhead (as opposed to downstream sales or
resales) for purposes of pricing and, therefore, are not subject to federal
regulation.

The transportation of natural gas in interstate commerce is subject to
federal regulation by the Federal Energy Regulatory Commission (FERC) under
the Natural Gas Act (NGA) and the Natural Gas Policy Act of 1978. In past
years, FERC has adopted regulatory policy changes that have affected the
transportation of natural gas from the wellhead to the market. Interstate
pipelines no longer perform a merchant function. Gas producers now sell gas
to end users or market accumulators rather than into the system supply of an
interstate pipeline who would then resell it. Transportation of gas on
interstate pipelines is now on an open access basis and interstate
pipelines have been required to unbundle their services with the result that
customers now only pay for the services they require. The interstate pipeline
connected to the gathering system for the underlying properties is subject to
the regulations described above.

In the past, Congress has been very active in the area of natural gas
regulation. At the present time, it is impossible to predict what proposals,
if any, might actually be enacted by Congress or the various state
legislatures and what effect, if any, such proposals might have on the
Underlying Properties and the Trust.

The State Oil and Gas Board of Alabama regulates the production of
natural gas, including requirements for obtaining drilling permits, the
method of developing new fields, provisions for the unitization or pooling of
natural gas properties, the spacing, operation, plugging and abandonment of
wells and the prevention of waste of natural gas resources. The rate of
production may be regulated, and the maximum daily production allowable from
natural gas wells may be

20



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established on a market demand or conservation basis
or both. Reductions in allowable production may extend the timing of
recovery of reserves. Although the Trust is not aware of any pending or
contemplated proceedings to change allowable rates of production from the
Underlying Properties, there can be no assurances made that such changes will
not be made. The Unitholders and the Trust will not have any control over
such changes. Reductions in the allowable production from the Underlying
Properties could affect the timing or amount of distributions to Unitholders.




Environmental Regulation

Operations on the Underlying Properties associated with the production
of natural gas are subject to numerous federal and state laws, rules and
regulations governing the discharge of materials into the environment or
otherwise relating to the protection of the environment. Such laws, rules
and regulations require the acquisition of certain permits, impose
substantial liabilities for pollution resulting from exploration and
production operations and may also restrict air or other pollution resulting
from operations. It is possible that federal and state environmental laws
and regulations will become more stringent in the future. For instance,
legislation has been proposed in Congress in connection with the pending
reauthorization of the Federal Resource Conservation and Recovery Act
(RCRA) that would amend RCRA to reclassify certain oil and gas production
wastes as hazardous waste. If adopted, this amendment would result in more
rigorous and expensive disposal requirements. It is impossible to predict
what the precise effect additional regulation or legislation, or enforcement
policies thereunder, could have on the operation of the Underlying
Properties. However, any costs or expenses incurred by the Company in
connection with environmental liabilities arising out of or relating to
activities occurring on, in or in connection with, or conditions existing on
or under, the Underlying Properties, will be borne by the Company and not the
Trust, and such costs and expenses will not be deducted in calculating Gross
Proceeds. Such costs and expenses may, however, be taken into account by the
Company in exercising its rights to abandon a well and may accelerate the
termination of the Trust. See PropertiesThe Royalty InterestsSale and
Abandonment of Underlying Properties and PropertiesDescription of the
TrustTermination and Liquidation of the Trust.

Water from the operations on the Underlying Properties is discharged
into the Black Warrior River pursuant to a National Pollutant Discharge
Elimination System permit issued by the Alabama Department of Environmental
Management (ADEM). ADEM initially issued 5 permits in connection with the
Underlying Properties, which were consolidated into one permit in February
1994. The ADEM permit was renewed in 1999 and will expire in July 2004.
Renewal of the permit has been applied for and is under review by the Alabama
Department of Environmental
Management. It generally authorizes water disposal based upon the Black
Warrior Rivers minimum flow rate and maximum chloride level. The Company
has advised the Trust that since 1987 water disposal from the Underlying
Properties has not been disrupted.

While the Company has informed the Trust that it believes the Underlying
Properties are in material compliance with all environmental laws and
regulations, such regulations have generally become more stringent and costly
over time. As a royalty holder, the Trust may not be directly subject to
increased costs; however, such costs may be taken into account by the Company
in exercising its rights to abandon a well, which may accelerate the
termination of the Trust. The Company has informed the Trust that it
estimates that it plans to expend approximately $70,000 during 2004 for
anticipated expenditures related to compliance with environmental laws.




Competition, Markets and Prices

The revenues of the Trust and the amount of cash distributions to
Unitholders depend upon, among other things, the effect of competition and
other factors in the market for natural gas. The natural gas industry is
highly competitive in all of its phases. The Company encounters competition
from major oil and gas companies, independent oil and gas concerns and
individual oil and gas producers and operators. Many of these competitors
have greater financial and other resources than the Company. Competition may
also be presented by alternative fuel sources, including heating oil and
other fossil fuels.

Demand for natural gas production has historically been seasonal in
nature and prices for natural gas fluctuate accordingly. Unseasonably warm
weather and the ability of markets to access storage can cause the demand for
natural gas to decrease, resulting in lower prices received by producers than
when demand is higher due to seasonal weather factors. Such price
fluctuations and the continuation of low prices for natural gas will directly
impact Trust distributions, estimates of reserves attributable to the Royalty
Interests and estimated future net revenue from reserves attributable to the
Royalty Interests.

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Prices for natural gas are subject to wide fluctuations in response to
relatively minor changes in supply, market uncertainty and a variety of
additional factors that are beyond the control of the Trust and the Company.
These factors include political conditions in the Middle East, the price and
quantity of imported oil and gas, the level of consumer product demand, the
severity of weather conditions, government regulations, the price and
availability of alternative fuels and overall economic conditions.
Additionally, lower natural gas prices may reduce the amount of gas that is
economic to develop or produce from the Underlying Properties.

The Trusts revenues and distributions to Unitholders will be primarily
dependent on the sales prices for Gas produced from the Underlying Properties
and the quantities of Gas sold. Natural gas prices have historically been
volatile and are likely to continue to be volatile. Price volatility and the
risk of production curtailment make it difficult to estimate the future
levels of cash distributions to Unitholders or the value of the Units. Since
the termination of the Gas Purchase Agreement, Gas is sold on a month to
month basis to various purchasers until such time as a long term contract can
be secured. See PropertiesThe Royalty InterestsGas Purchase Agreement.

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Item 2. Properties. 
 THE ROYALTY INTERESTS The Royalty Interests held by the Trust generally entitle the Trust to
receive 65 percent of Gross Proceeds. The Royalty Interests were conveyed to
the Trust by means of a single instrument of conveyance. The Conveyance was
recorded in the appropriate real property records in Alabama, so as to give
notice of the Royalty Interests to creditors, and any transferees will take
an interest in the Underlying Properties subject to the Royalty Interests.
The Conveyance was intended to convey the Royalty Interests as real property
interests under Alabama law. The following description of the material provisions of the Conveyance
and the Trust Agreement is subject to and qualified by the more detailed
provisions of the Conveyance and the Trust Agreement included as exhibits to
this Form 10-K. 
 The Underlying Properties Black Warrior Basin. The Black Warrior Basin covers 6,000 square miles
in west central Alabama and contains 7 Pennsylvania-age multi-seam coal
groups in the Pottsville formation: the Black Creek, Mary Lee, Pratt, Cobb,
Gwin, Utley and Brookwood coal groups. The Pottsville coal formation ranges
from the surface to a depth of 4,100 feet. Wells in the Black Warrior Basin produce natural gas from coal seam
formations that have production characteristics materially different from
conventional natural gas wells. The primary factor affecting recovery of gas
reserves from coal seams in the Black Warrior Basin is the lowering of
reservoir pressure through dewatering operations. In a typical coal seam
gas well on the Underlying Properties, average daily natural gas production
generally will increase as wells are dewatered until natural gas production
reaches a peak at which time natural gas production will decline. The
amount of time necessary to dewater a well and cause it to reach its peak
production, and the ultimate level of a wells peak production, are difficult
to estimate. Since all of the 532 wells included in the Underlying
Properties were producing by mid-1991, the Company believes that production
from such wells is currently past its peak and will decline over the term of
the Trust. The Royalty Interests were conveyed by the Company to the Trust out of
the Company Interests. The Existing Wells are operated by Dominion Black
Warrior Basin, Inc. in accordance with the Operating Agreement. See
Operation of Properties. The Underlying Properties comprise 34,212 gross
acres of land in an area approximately 5 miles wide and 23 miles long located
on the Tuscaloosa to Bankhead Lake portion of the Black Warrior Basin.
Initial production began in December 1988 and consisted of 8 wells. The
Company acquired its interest in the Underlying Properties in December 1992.
As of December 31, 2003, the Underlying Properties contained 532 wells that
were producing gas, all of which were drilled prior to 1993. Well Count and Acreage Summary.The following table shows as of
December 31, 2003, the gross and net producing wells and acres for the
Company Interests. The net wells and acres are determined by multiplying the
gross wells or acres by the Company Interests Owners working interest in the
wells or acres. Number ofWells
    
    AcresGross
    
    Net
    
    Gross
    
    NetCompany Interests
    
    
    532
    
    
    
    519
    
    
    
    34,212
    
    
    
    33,391
 Royalty Interests, Company Interests and Retained Interests.On June 1,
1994, the effective date of the Conveyance, the Company had an average
aggregate working interest in the Existing Wells of approximately 98 percent,
and an average aggregate net revenue interest of approximately 80 percent in
the Existing Wells. The Company has not sold or otherwise disposed of any of
its interest in the Company Interests since June 1, 1994. The Royalty
Interests are entitled to approximately 52 percent of the net revenue from
natural gas produced and sold from the Underlying Properties, and the
interests (the Retained Interests) of the Company in the Underlying
Properties (after giving effect to the Royalty Interests) entitle the Company
to receive approximately 28 percent of the net revenue from the natural gas
produced and sold from 23




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the Underlying Properties. As a working interest
owner in the Underlying Properties, the Company is responsible for an average
of approximately 98 percent of the operating costs of the Existing Wells. The Royalty Interests do not burden (i) royalties and other obligations,
expressed or implied, under oil or natural gas leases, (ii) the overriding
royalties and other burdens created by the Companys predecessors in title,
or (iii) the working interests owned by other individual working interest
owners. Water Removal and Disposal.Water from the wells located on the
Underlying Properties is pumped from the wellhead to one of 5 water disposal
systems, each with 2 ponds, where the water is analyzed and chemically
treated to remove impurities, if necessary, prior to discharge into the Black
Warrior River. Water from the operations on the Underlying Properties is
discharged into the Black Warrior River pursuant to a National Pollutant
Discharge Elimination System permit issued by ADEM that will expire in July
2004. A new permit has been requested for post-July 2004. The ADEM permit
generally authorizes water disposal based upon the Black Warrior Rivers
minimum flow rate and maximum chloride level. The Company has advised the
Trust that, since 1987, water disposal from the Underlying Properties has not
been disrupted. Although the facilities of the Company have the capacity to
store several days of water production, if water disposal into the Black
Warrior River is disrupted, natural gas production from the wells on the
Underlying Properties would be curtailed during the period of such
disruption. See BusinessRegulation and PricesEnvironmental Regulation. Curtailments.The Company has advised the Trust that, during 2003,
production from the Underlying Properties was not curtailed for any reason
other than for routine maintenance. Federal Lands.Approximately one percent (360 acres) of the Underlying
Properties are leases on land held by the federal government. Royalty
payments due to the U.S. government for natural gas produced from federal
lands included in the Underlying Properties must be calculated in conformance
with a working interest owners interpretation of regulations issued by the
Minerals Management Service (MMS). MMS regulations cover both valuation
standards, which establish the basis for placing a value on production, and
cost allowances, which define those post-production costs that are deductible
by the lessee. The Trust is subject to certain rules of the Bureau of Land Management
under which the holding of interests in leases by persons other than
citizens, nationals and legal resident aliens of the United States (Eligible
Citizens) are limited. As a result, non-Eligible Citizens are prohibited
from owning Units. If any Units are acquired by persons or entities not
constituting Eligible Citizens, such Unitholders may be required to sell such
Units pursuant to a procedure set forth in the Trust Agreement. See
BusinessDescription of the TrustPossible Divestiture of Units. Additional Wells.Well spacing rules, which are in effect in Alabama,
generally govern the space between wells drilled to the same productive
formation and are promulgated in order to prevent waste and confiscation of
property. Pursuant to such rules, the Existing Wells are located on 40- to
80-acre spacing units. Exceptions or changes to these rules may be granted
by the applicable regulatory agency upon application of an interested party
following notice to other interested parties if, in the agencys opinion,
good reasons exist therefor after consideration of evidence presented by the
applicant and any opponents. The Company has informed the Trust that it is
not aware of any plans to change spacing regulations with respect to the
Underlying Properties in Alabama. No assurances can be made, however, that
exceptions or changes will not be made in the future. The Company and its affiliates or unrelated third parties may acquire
interests in properties adjoining the Underlying Properties. It is possible
that wells drilled on adjoining properties would drain reserves attributable
to the Underlying Properties. The Company has agreed for the term of the Trust not to consent to,
cooperate with, assist in or conduct infill drilling (except as required by
law) on any of the Underlying Properties in which the Company owned an
interest as of June 1, 1994. Although the Company believes that it is
unlikely that any additional wells will be drilled, if the Operating
Agreement is terminated, the Company cannot prevent one of the other owners
of an interest in the
Underlying Properties from drilling additional wells on the Underlying
Properties. Additional wells, if drilled, could recover a portion of the
reserves otherwise producible from wells burdened by the Company Interests,
thereby reducing the Gross Proceeds attributable to the Royalty Interests. 24




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If additional wells are drilled, Section 29 tax credits will not be
generated from production attributable to such additional wells unless the
Section 29 tax credit is extended or reinstated and the drilling requirement
is changed. 
 The Royalty Interests Summary of Conveyance.The Conveyance has been filed as an exhibit to
this Form 10-K. The following summary of the material terms of the
Conveyance is qualified in its entirety by reference to the terms thereof as
set forth in such exhibit. Expenses Borne by Royalty Interests.The Royalty Interests are
non-operating, non-expense bearing interests, except for their share of
property, production and related taxes, including severance taxes.
Accordingly, owners of the Royalty Interests are not liable or responsible
for costs or liabilities incurred by the working interest owners in
connection with the production of Gas from the Underlying Properties. Operating Standard.The Company Interests Owner is obligated to conduct
and carry on, as would a reasonably prudent operator, or cause to be so
conducted or carried on, the development, maintenance and operation of the
Company Interests. Infill Drilling.The Company Interests Owner has agreed not to consent
to, cooperate with, assist in or conduct any infill drilling on the
Underlying Properties, except as required by law. Pratt Recompletions.To recover behind pipe reserves, the Company
Interests Owner recompleted certain of the Existing Wells to the Pratt coal
seam prior to March 31, 1997. To the extent that production from the
recompleted wells qualifies for the Section 29 tax credit, such production is
taken into account by the Trustee when computing the Tax Credit per Unit
furnished annually to Unitholders. Right to Take In-Kind.The owner of the Royalty Interests has no right
to take production in-kind. Pooling and Unitization.The Company Interests Owner has certain
pooling and unitization rights. Right to Assign Company Interests.The Company Interests Owner has the
right to assign all or any part of the Company Interests, subject to the
Royalty Interests and the terms and provisions of the Conveyance. If any
such assignment is made of part, but not all, of such interests, then
effective as of the date of such assignment, the assignee will be required to
make a separate computation of Gross Proceeds attributable to the assigned
interests. Sale or Assignment of Royalty Interests.In certain situations, the
Trust may sell or dispose of all or a part of the Royalty Interests, in which
case the Trust would receive the proceeds therefrom and distribute such
proceeds to the Unitholders, net of any amounts held as a reserve. See
BusinessDescription of the TrustTransfer of Royalty Interests and
BusinessDescription of the TrustDuties and Limited Powers of the Trustee. Books and Records.The Company Interests Owner is required to maintain
books and records sufficient to determine the amounts payable with respect to
the Royalty Interests. Computation and Payment.The Royalty Interests entitle the Trust to
receive 65 percent of the Gross Proceeds. The Royalty Interests bear their
proportionate share of property, production and related taxes (including
severance taxes). The definitions, formulas and accounting procedures and
other terms governing the computation of the Royalty Interests are set forth
in the Conveyance. The Company Interests Owner is required, pursuant to the Conveyance, to
pay to the Trust amounts received by the Company Interests Owner from the
sale of Subject Gas attributable to the Royalty Interests. Under the
Conveyance, the amounts payable by the Company Interests Owner with respect
to the Royalty Interests are computed with respect to each calendar quarter
ending prior to termination of the Trust, and such amounts are paid to the
Trust not later than the last business day before the 45th day following the
end of each calendar quarter. The amounts paid to the Trust do not include
interest on any amounts payable with respect to the Royalty Interests that
are held by the Company Interests Owner prior to payment to the Trust. The
Company Interests Owner is entitled to retain all amounts
attributable to the Retained 25




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Interests. The Company Interests Owner deducts
from the payment to the Trust the Royalty Interests share of property,
production and related taxes (including severance taxes) and pays the same on
behalf of the Trust. 
 Reserve Estimate Reserve Estimate.The following table summarizes net proved reserves
estimated as of January 1, 2004, and certain related information for the
Royalty Interests from the Reserve Estimate prepared by Ralph E. Davis &
Associates. The natural gas reserves were estimated by Ralph E. Davis &
Associates by applying volumetric and decline curve analyses. All of such
reserves constitute proved developed gas reserves. The Reserve Estimate was
prepared in accordance with criteria established by the Commission. As ofRoyalty Interests
    
    January 1, 2004Net Proved Natural Gas Reserves (MMcf)(a)(b):Developed Producing
    
    
    41,586Estimated Future Net Revenues (in thousands) (a)(c):2004
    
    
    25,1112005
    
    
    21,9482006
    
    
    19,2742007
    
    
    16,9442008
    
    
    14,916Thereafter
    
    
    113,834Total
    
    
    212,027Total Discounted at 10 Percent
    
    
    117,284
   (a)
    
    The estimates of reserves and future net revenues summarized in this
table are based upon an unescalated price of $5.9168 through December
31, 2003, which was the price being received by the Company under the
Gas Purchase Agreement as of January 1, 2004. After December 31, 2003,
the price of $5.9168 per Mcf was utilized, which represented the market
price for gas in their fields as of December 31, 2003. This price may
not be the most representative price for estimating reserves or related
future net revenues data. See Gas Purchase Agreement.(b)
    
    As discussed in BusinessFederal Income Tax Considerations, coal seam
gas produced and sold after December 31, 2002, will no longer generate a
Section 29 tax credit unless the Section 29 tax credit is extended or
reinstated by Congress.(c)
    
    Estimated future net revenues are defined as the total revenues
attributable to the Royalty Interests for gas production less the
relevant share of production, property and related taxes (including
severance taxes). Overhead costs have not been included, nor have the
effects of depreciation, depletion and federal income tax. Estimated
future net revenues and discounted estimated future net revenues are not
intended and should not be interpreted as representing the fair market
value for the estimated reserves. The reserve data set forth herein, which was prepared by Ralph E. Davis
& Associates in a manner customary in the industry, is an estimate only, and
actual quantities, rates of production and sales prices for natural gas are
likely to differ from the estimated amounts set forth herein, and such
differences could be significant. There are many uncertainties inherent in estimating quantities and
values of proved reserves and in projecting future rates of production.
Reserve engineering is a subjective process of estimating underground
accumulations of natural gas that cannot be measured in an exact manner. The
accuracy of any reserve estimate is a function of the quality of available
data and of the geological and engineering evaluation of that data. Results
of testing and production subsequent to the date of an estimate may justify
revision of such estimate. Further, reserve estimates for any given property
may vary from engineer to engineer even though each engineer bases his
estimate on common data and utilizes techniques and principles customary in
the industry. For properties with short production histories, reserve estimates in
many instances are based upon volumetric calculations and upon analogy to
similar types of production or producing fields. Relative to many
conventional natural gas producing properties, coal seam gas producing
properties in general, and the Underlying Properties in particular, have
short production histories. In addition, there are no significant coal seam
reservoirs that have been produced to depletion that can be used as analogies
to the Underlying Properties. 26




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##### Table of Contents



The discounted estimated future net revenues shown herein were prepared
using guidelines established by the Commission and may not be representative
of the market value for the estimated reserves. The reserves attributable to the Royalty Interests are expected to
decline substantially during the term of the Trust, and a portion of each
cash distribution made by the Trust will, therefore, be analogous to a return
of capital. As a result, cash distributions will decrease materially over
time. For example, based upon the production estimates set forth in the
Reserve Estimate, annual production attributable to the Royalty Interests is
estimated to decline from 4.9 Bcf in 2004 to 3.3 Bcf in 2007. Miscellaneous.Ralph E. Davis & Associates has delivered to the Trust
the Reserve Estimate, a summary of which is included as an exhibit to this
Form 10-K. Information concerning historical changes in net proved developed
reserves attributable to the Royalty Interests, and the calculation of the
standardized measure of discounted future net revenues related thereto, is
contained in Note 8 of the Notes to the Financial Statements incorporated by
reference in Item 8 hereof. Dominion Resources has not filed reserve
estimates covering the Royalty Interests with any other federal authority or
agency. 
 Natural Gas Sales Prices and Production The following table sets forth the actual net production volumes
attributable to the Royalty Interests, weighted average property, production
and related taxes and information regarding natural gas sales prices for the
years ended December 31, 2003, December 31, 2002 and December 31, 2001. Year ended
    
    Year ended
    
    Year endedDecember 31, 2003
    
    December 31, 2002
    
    December 31, 2001Production attributable to the Royalty
Interests (Bcf)
    
    
    5.1
    
    
    
    6.1
    
    
    
    7.0Weighted average property, production and
related taxes (per Mcf)
    
    $
    .16
    
    
    $
    .15
    
    
    $
    .16Average Contract Price (per Mcf)
    
    $
    4.22
    
    
    $
    3.70
    
    
    $
    2.99
 
 Gas Purchase Agreement El
Paso Merchant Energy - Gas, L.P. (El Paso), successor to Sonat
Marketing Company (Sonat Marketing), was required under the Gas Purchase
Agreement to purchase the Gas produced from the Underlying Properties until
such agreement was terminated, effective January 31, 2004. Under the
agreement, Sonat Marketing (as predecessor to El Paso under the Gas Purchase
Agreement) was, in past years, obligated to purchase up to a specified
monthly base quantity of Gas for a contract price equal to the Index Price
plus a specified premium (between $.05 and $.07 per MMBtu) over the Index
Price. Until December 31, 1998, the Contract Price paid was subject to a
minimum price of $1.85 per MMBtu and a maximum price of $2.63 per MMBtu.
Beginning effective January 1, 1999, the Contract Price paid was subject to a
minimum price of $2.16 per MMBtu and a maximum price of $3.07 per MMBtu.
Beginning effective January 1, 2000 through December 31, 2000, the price paid
on Index Price Quantities to a minimum price of $2.20 and a maximum price of
$2.82. Prior to April 1, 1996, Sonat Marketing was obligated to purchase Gas
production in excess of the specified monthly base quantities at the Index
Price. Effective April 1, 1996 through December 31, 1998, the price paid for
such Gas production in excess of the specified monthly base quantities was
the Index Price plus $.02. Effective January 1, 1999 through December 31,
2000, the price paid Gas production in excess of the specified monthly basis
quantities was the Index Price plus $.02. The Index Price, which is
determined on a monthly basis, was Southern Natural Gas Companys posted
index price for deliveries of gas in Louisiana. Effective January 1, 2001 through December 31, 2001, the price payable
by El Paso for each MMBtu of the base quantity specified for each month was
divided into three categories, (i) a fixed price quantity, (ii) an index
price quantity subject to a floor and ceiling price (the Collared Index
Quantity), and (iii) an index price quantity not subject to a floor or
ceiling price (the Non-Collared Index Quantity). The price paid for each
MMBtu of fixed price quantity was $3.97 per MMBtu. For the amount of gas
sold in excess of the fixed price quantity, the price for each MMBtu of gas
sold up to the Collared Index Quantity was the Index Price, provided that the
price payable each month would in no event be less than $3.00 per MMBtu or
more than $5.30 per MMBtu. For the amount of Gas sold in excess of the fixed
price quantity plus the Collared Index Quantity, the price for each MMBtu of
Gas sold was the sum of (a) the Index Price and (b) a premium 27




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##### Table of Contents



per MMBtu
(ranging from $.05 to $.07). The price payable by El Paso for each MMBtu of
Gas production in excess of the specified monthly base quantity each month
was the sum of the Index Price plus $.02. Pursuant to a Gas Purchase

Agreement amendment, effective January 1, 2002 through December 31,
2002, the price payable by El Paso for each MMBtu for each month was (a) for
quantities of Gas up to and including the applicable Monthly Fixed Price
Quantity, $3.70 per MMBtu, and (b) for quantities of Gas over and above the
Monthly Fixed Price Quantity up to the Monthly Base Quantity, the sum of (i)
the Index Price and (ii) a premium per MMBtu, ranging from $.05 to $.07,
multiplied by 0.9826, the wet/dry conversion factor. Pursuant to that same
Gas Purchase Agreement amendment, commencing January 1, 2002, the price
payable by El Paso for each MMBtu over and above the Monthly Base Quantity
equaled the sum of (i) the Index Price and (ii) $.02 per MMBtu, multiplied by
0.9826, the wet/dry conversion factor. Pursuant to the same Gas Purchase
Agreement amendment, commencing January 1, 2003, the price for quantities up
to and including the Monthly Base Quantity shall be the sum of (i) the Index
Price and (ii) a premium per MMBtu, ranging from $.05 to $.07, multiplied by
0.9826, the wet/dry conversion factor. Pursuant to the same Gas Purchase
Agreement amendment, commencing January 1, 2003, the price for quantities up
to and including the Monthly Base Quantity shall be the sum of (i) the Index
Price and (ii) a premium per MMBtu, ranging from $.05 to $.07, multiplied by
0.9826, the wet/dry conversion factor. Pursuant to the July 1, 2002 Gas
Purchase Agreement amendment, effective January 1, 2003, the price payable by
El Paso for each MMBtu of Gas produced up to and including the applicable
monthly specified base quantity during each month shall be divided into two
categories, a Fixed Price quantity and an Index Price Quantity. Until
December 31, 2003, the price payable by El Paso for each MMBtu of Gas
produced up to and including the applicable monthly Fixed Price Quantity
shall be $3.68 per MMBtu. The price payable by El Paso for each MMBtu of Gas
produced in excess of the applicable monthly Fixed Price Quantity and up to
and including the applicable monthly Index Price Quantity shall be the sum of
(i) the Index Price and (ii) a premium per MMBtu, ranging from $.05 to $.07,
multiplied by 0.9826, the wet/dry conversion factor. Commencing January 1,
2004, the pricing formula for the Index Price Quantity described in the
immediately preceding sentence shall apply to the entire monthly base
quantity. Also effective January 1, 2004, the price payable by El Paso for
Gas production in excess of the specified monthly base quantity each month
shall be the sum of the Index Price and $.02 per MMBtu, multiplied by 0.9826,
the wet/dry conversion factor. Effective January 31, 2004, the Gas Purchase
Agreement was terminated. Effective February 1, 2004, Gas will be sold on a
month to month basis to various purchasers until such time as a long-term
contract can be secured. The Gas Purchase Agreement, and the amendments thereto, are filed as
exhibits to this Form 10-K, and the foregoing summary of the material terms
of such agreement is qualified in its entirety by reference to the terms of
such agreement and amendments as set forth in such exhibits. 
 Operation of Properties No Control by Trust.Under the terms of the Conveyance, neither the
Trustees nor Unitholders will be able to influence or control the operation
or future development of the Underlying Properties. Unitholders will
therefore be reliant on the Company and the other working interest owners to
make all decisions regarding operations on the Underlying Properties. The
Trust will not be able to appoint or control the appointment of operators. The Conveyance does not prohibit the transfer of the Underlying
Properties by the Company, subject to and burdened by the Royalty Interests.
The Company and the other working interest owners of the Underlying
Properties will have the right, subject to certain restrictions, to abandon
any well or lease on the Underlying Properties under certain circumstances.
Upon abandonment of any such well or lease, that portion of the Royalty
Interests relating thereto will be extinguished. See Sale and Abandonment
of the Underlying Properties. Operating Agreement.Pursuant to the Operating Agreement,
ConocoPhillips operated and maintained the Underlying Properties for the
Company and the other working interest owners until January 1, 2003. As
amended October 30, 1996, the Operating Agreement had a 3-year term and was
to be automatically renewed for additional one-year periods unless either
party provided written notice to the other party of its desire to terminate
the Operating Agreement before the end of the current calendar year. On
December 27, 2000, Dominion Resources notified ConocoPhillips that it was
terminating the automatic one-year extension of the agreement. As such, the
Operating Agreement was amended effective January 1, 2003 naming Dominion
Black Warrior Basin, Inc. as the operator of the underlying properties. 
 Sale and Abandonment of Underlying Properties The Company has the right to abandon any well or lease included in the
Underlying Properties if, in its opinion, acting as would a reasonably
prudent operator, such well or lease is not capable of producing Gas in
commercial quantities 28




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##### Table of Contents



(determined before giving effect to the Royalty
Interests). Neither the Trust nor the Unitholders will control the timing of
the plugging and abandoning of any wells. Through December 31, 2003, none of
the wells included in the Underlying Properties had been plugged and
abandoned. The Company may sell its interest in the Underlying Properties, subject
to and burdened by the Royalty Interests, without the consent of the Trust or
Unitholders. Under the Trust Agreement, the Company has certain rights (but
not the obligation) to purchase the Royalty Interests upon termination of the
Trust. See BusinessDescription of the Trust AgreementTermination and
Liquidation of the Trust. 
 Dominion Resourcess Assurances Pursuant to the Trust Agreement, Dominion Resources has agreed to cause
each of the following obligations to be paid in full when due: (i) all
liabilities and operating and capital expenses that any Company Interests
Owner becomes obligated to pay as a result of such Company Interests Owners
obligations under the Conveyance and (ii) the obligations of the Company to
indemnify the Trust, the Trustee and the Delaware Trustee for certain
environmental liabilities under the Trust Agreement (collectively, the
Payment Obligations). The Trustee may, at any time after the 10th day following receipt by
Dominion Resources of written notice from the Trustee that a Payment
Obligation has not been paid when due, make demand of Dominion Resources for
payment stating the amount due. Dominion Resources is obligated to cure any
failure to pay the obligation within 10 days following receipt of the
foregoing demand. After written request of the Unitholders owning of record
not less than 25 percent of the Units then outstanding served upon the
Trustee, and absent action by the Trustee within 10 days following receipt by
the Trustee of such written request to enforce such obligations for the
benefit of the Trust, such Unitholders may, acting as a single class and on
behalf of the Trust, seek to enforce Dominion Resourcess performance
obligations. All of Dominion Resourcess obligations will terminate upon: (i) the
termination and cancellation of the Trust, (ii) the sale or other transfer by
the Company of all or substantially all of the Companys interest in the
Underlying Properties subject to the terms of the Trust Agreement and (iii)
the sale or other transfer of a majority of Dominion Resourcess direct or
indirect equity ownership interest in the Company; provided that, with
respect to clauses (ii) and (iii) above, Dominion Resourcess obligations
will terminate only if: (a) the transferee has a specified credit rating or
the transferee together with an affiliate that guarantees the transferees
obligations has not less than a specified net worth or (b) the transferee is
approved by the holders of a majority of the outstanding Units; and provided
further, that in the case of clauses (ii) or (iii) above the transferee also
unconditionally agrees in writing, in form and substance reasonably
satisfactory to the Trustee, to assume Dominion Resourcess remaining
obligations under the Trust Agreement with respect to the assets transferred
and under the Administrative Services Agreement. 
 Title to Properties Alabama counsel to Dominion Resources and the Company has opined that
the Companys title to its interest in the Underlying Properties, and the
Trusts title to the Royalty Interests, are good and defensible in accordance
with standards generally accepted in the natural gas industry, subject to
such exceptions that, in the opinion of Alabama counsel, are not so material
as to detract substantially from the use or value of the Company Interests or
the Royalty Interests. Although the matter is not entirely free from doubt, Alabama counsel has
opined that the Royalty Interests constitute interests in real property under
Alabama law. Consistent therewith, the Conveyance states that the Royalty
Interests constitute real property interests. The Company has recorded the
Conveyance in the appropriate real property records of Alabama in accordance
with local recordation provisions. If, during the term of the Trust, the
Company or any Company Interests Owner becomes involved as a debtor in
bankruptcy proceedings under the Federal Bankruptcy Code, it is not entirely
clear that the Royalty Interests would be treated as real property interests
under the laws of Alabama. 
 Item 3. Legal Proceedings. There are no material pending legal proceedings to which the Trust is a
party or of which any of its property is the subject. 29




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Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. 
 PART II 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters. The Units in the Trust are listed and traded on the NYSE under the
symbol DOM. The following table sets forth, for the periods indicated, the
high and low sales prices per Unit on the NYSE and the amount of quarterly
cash distributions per Unit paid by the Trust. PriceDistributionHigh
    
    Low
    
    per Unit2003First Quarter
    
    $
    24.25
    
    
    $
    20.10
    
    
    $
    .644817Second Quarter
    
    
    27.30
    
    
    
    21.95
    
    
    
    .695362Third Quarter
    
    
    29.18
    
    
    
    23.05
    
    
    
    .616863Fourth Quarter
    
    
    29.25
    
    
    
    26.70
    
    
    
    .5726782002First Quarter
    
    $
    21.30
    
    
    $
    19.65
    
    
    $
    .576189Second Quarter
    
    
    24.55
    
    
    
    17.20
    
    
    
    .575137Third Quarter
    
    
    22.27
    
    
    
    17.55
    
    
    
    .623862Fourth Quarter
    
    
    22.00
    
    
    
    19.05
    
    
    
    .597635
 At March 1, 2004, there were 7,850,000 Units outstanding and approximately
704 Unitholders of record. The Trust has no equity compensation plans and has not repurchased any
units during the period covered by this report. 
 Item 6. Selected Financial Data. Year Ended December 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Royalty Income
    
    $
    20,746,843
    
    
    $
    19,418,476
    
    
    $
    25,937,254
    
    
    $
    20,874,519
    
    
    $
    20,031,958Distributable Income
    
    $
    19,835,642
    
    
    $
    18,623,941
    
    
    $
    25,215,487
    
    
    $
    20,229,281
    
    
    $
    19,385,356Distributable Income per Unit
    
    $
    2.53
    
    
    $
    2.37
    
    
    $
    3.21
    
    
    $
    2.58
    
    
    $
    2.47Distributions per Unit
    
    $
    2.53
    
    
    $
    2.37
    
    
    $
    3.21
    
    
    $
    2.58
    
    
    $
    2.46Total Assets, December 31
    
    $
    44,820,393
    
    
    $
    50,566,037
    
    
    $
    57,819,259
    
    
    $
    65,691,406
    
    
    $
    75,397,111Total Corpus, December 31
    
    $
    44,689,580
    
    
    $
    50,441,689
    
    
    $
    57,707,439
    
    
    $
    65,575,056
    
    
    $
    75,273,180
 30




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Item 7. Trustees Discussion and Analysis of Financial Condition and Results of Operations. The Trust collects the proceeds attributable to the Royalty Interests
and makes quarterly cash distributions to Unitholders. The only assets of
the Trust, other than cash and cash equivalents being held for the payment of
expenses and liabilities and for distribution to Unitholders, are the Royalty
Interests. The Royalty Interests owned by the Trust burden the interest in
the Underlying Properties that is owned by the Company. The Royalty Interests consist of overriding royalty interests burdening
the Companys interest in the Underlying Properties. The Royalty Interests
generally entitle the Trust to receive 65 percent of the Gross Proceeds (as
defined below) during the preceding calendar quarter. The Royalty Interests
are non-operating interests and bear only
expenses related to property, production and related taxes (including
severance taxes). Gross Proceeds consist generally of the aggregate amounts
received by the Company attributable to the interests of the Company in the
Underlying Properties from the sale of coal seam gas at the central delivery
points in the gathering system for the Underlying Properties. Distributable income of the Trust generally consists of the excess of
royalty income plus interest income over the administrative expenses of the
Trust. Upon receipt by the Trust, royalty income is invested in short-term
investments in accordance with the Trust Agreement until its subsequent
distribution to Unitholders. The amount of distributable income of the Trust for any calendar year
may differ from the amount of cash available for distribution to the
Unitholders in such year due to differences in the treatment of the expenses
of the Trust and the determination of those amounts. The financial
statements of the Trust are prepared on a modified cash basis pursuant to
which the expenses of the Trust are recognized when they are paid or reserves
are established whereas royalty income is recognized when received by the
Trust. Consequently, the reported distributable income of the Trust for any
year is determined by deducting from the income received by the Trust the
amount of expenses paid by the Trust during such year. The amount of cash
available for distribution to Unitholders is determined after adjustment for
changes in reserves for unpaid liabilities in accordance with the provisions
of the Trust Agreement. See Note 5 to the financial statements of the Trust
appearing elsewhere in this Form 10-K for additional information regarding
the determination of the amount of cash available for distribution to
Unitholders. The year 2003 marked the ninth full year of the existence of the Trust.
The Trust received royalty income amounting to $20,746,843 during the year
ended December 31, 2003, compared to $19,418,476 for 2002 and $25,937,254 for
2001. The royalty income received by the Trust was net of the Royalty
Interests allocable share of property, production and related taxes.
Administrative expenses during the year ended December 31, 2003 increased to
$923,785, compared to $810,557 for 2002 and $776,431 for 2001.
Distributable income for the year ended December 31, 2003 was $19,835,642, or
$2.53 per Unit, compared to $18,623,941, or $2.37 per Unit, for 2002 and
$25,215,487, or $3.21 per Unit, for 2001. The increase in administrative expenses in 2003 compared to 2002 was
primarily the result of increased professional fees. Similarly, the increase
from 2001 to 2002 was the result of higher printing costs and increased
professional fees. Royalty income to the Trust is attributable to the sale of depleting
assets. All of the Underlying Properties burdened by the Royalty Interests
consist of producing properties. Accordingly, the proved reserves
attributable to the Companys interest in the Underlying Properties are
expected to decline substantially during the term of the Trust and a portion
of each cash distribution made by the Trust will, therefore, be analogous to
a return of capital. Accordingly, cash yields attributable to the Units are
expected to decline over the term of the Trust. The decreases in royalty
income and distributable income noted in the preceding paragraph were due
primarily to this depletion of reserves and to a decrease in the average
prices received for gas attributable to the Royalty Interests as summarized
in the table below. Royalty Income received by the Trust in a given calendar year will
generally reflect the proceeds from the sale of gas produced from the
Underlying Properties during the first three quarters of that year and the
fourth quarter of the preceding calendar year due to the timing of the
receipt of these revenues. Accordingly, the royalty income included in
distributable income for the years ended December 31, 2003, 2002 and 2001,
was based on production volumes and natural gas prices for the periods from
October 1, 2002 to September 30, 2003, October 1, 2001 to September 30, 2002
and October 1, 2000 to September 30, 2001, respectively. The following table sets forth the production volumes attributable to
the Trusts Royalty Interests and the average sales Price and Index Price for
such production for the periods indicated. 31




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For 12 Months EndedSeptember 30,2003
    
    2002
    
    2001Production (Bcf)(1)
    
    
    5.326
    
    
    
    6.129
    
    
    
    6.963Production (MMBtu)(2)
    
    
    5.367
    
    
    
    6.152
    
    
    
    6.942Average Contract Price Received ($/MMBtu)
    
    $
    4.13
    
    
    $
    3.36
    
    
    $
    3.76Average Index Price ($/MMBtu)
    
    $
    4.27
    
    
    $
    2.78
    
    
    $
    4.94
   (1)
    
    Billion cubic feet of natural gas.(2)
    
    Trillion British Thermal Units. The information in this Form 10-K concerning production and prices
relating to the Royalty Interests is based on information prepared and
furnished by the Company to the Trustee. The Trustee has no control over and
no responsibility relating to the operation of or accounting for the
Underlying Properties. El Paso (as successor to Sonat Marketing) was required under the Gas
Purchase Agreement to purchase the Gas produced from the Underlying
Properties for as long as reserves on the Underlying Properties until such
agreement was terminated, effective January 31, 2004. Under the agreement,
Sonat Marketing was, in past years, obligated to purchase up to a specified
monthly base quantity of Gas (the Index Price Quantity) for a contract
price equal to the Index Price plus a specified premium (between $.05 and
$.07 per MMBtu) over the Index Price. Until December 31, 1998, the Contract
Price paid was subject to a minimum price of $1.85 per MMBtu and a maximum
price of $2.63 per MMBtu. Beginning effective January 1, 1999, the Contract
Price paid was subject to a minimum price of $2.16 per MMBtu and a maximum
price of $3.07 per MMBtu. Beginning effective January 1, 2000 through
December 31, 2000, the price paid on Index Price Quantities was subject to a
minimum price of $2.20 and a maximum price of $2.82. Beginning effective
January 1, 2001 through December 31, 2001, the Contract Price paid was
subject to a minimum price of $2.83 per MMBtu and a maximum price of $6.46
per MMBtu. Beginning effective January 1, 2002 through December 31, 2002,
the Contract Price paid was subject to a minimum price of $3.70 per MMBtu and
a maximum price of $5.30 per MMBtu. Commencing January 1, 2003, the price
for quantities up to and including the Monthly Base Quantity was the sum of
(i) the Index Price and (ii) a premium per MMBtu, ranging from $.05 to $.07,
multiplied by 0.9826, the wet/dry conversion factor. Pursuant to the same
Gas Purchase Agreement amendment, commencing January 1, 2003, the price for
quantities up to and including the Monthly Base Quantity was the sum of (i)
the Index Price and (ii) a premium per MMBtu, ranging from $.05 to $.07,
multiplied by 0.9826, the wet/dry conversion factor. Pursuant to the July 1,
2002 Gas Purchase Agreement amendment, effective January 1, 2003, the price
payable by El Paso for each MMBtu of gas produced up to and including the
applicable monthly specified base quantity during each month was divided into
two categories, a Fixed Price quantity and an Index Price Quantity. Until
December 31, 2003, the price payable by El Paso for each MMBtu of gas
produced up to and including the applicable monthly Fixed Price Quantity was
$3.68 per MMBtu. The price payable by El Paso for each MMBtu of gas produced
in excess of the applicable monthly Fixed Price Quantity and up to and
including the applicable monthly Index Price Quantity was the sum of (i) the
Index Price and (ii) a premium per MMBtu, ranging from $.05 to $.07,
multiplied by 0.9826, the wet/dry conversion factor. Commencing January 1,
2004, the pricing formula for the Index Price Quantity described in the
immediately preceding sentence shall apply to the entire monthly base
quantity. Also effective January 1, 2004, the price payable by El Paso for
Gas production in excess of the specified monthly base quantity each month
shall be the sum of the Index Price and $.02 per MMBtu, multiplied by 0.9826,
the wet/dry conversion factor. Prior to April 1, 1996, Sonat Marketing was
obligated to purchase Gas production in excess of the specified monthly base
quantities at the Index Price. Effective April 1, 1996 through December 31,
2001, the price paid for such Gas production in excess of the specified
monthly basis quantities was the Index Price plus $.02. The Index Price,
which is determined on a monthly basis, was Southern Natural Gas Companys
posted index price for deliveries of gas in Louisiana. Effective January 31,
2004, the Gas Purchase Agreement was terminated. Effective February 1, 2004,
Gas will be sold on a month to month basis to various purchasers until such
time as a long-term contract can be secured. The net proved reserves attributable to the Royalty Interests have been
estimated as of December 31, 2003, 2002 and 2001, by independent petroleum
engineers. The reserve quantities of 41.6 Bcf for 2003 compared to 42.6 Bcf
for 2002 32




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##### Table of Contents



and compared to 51.0 Bcf for 2001, reflect a decline in reserves
between 2001 and 2002 and between 2002 and 2003 as a result of production.
See Financial Statements and Supplementary Data Notes to Financial
Statements Note 8. 
 Critical Accounting Policies and Estimates The Trusts financial statements reflect the selection and application
of accounting policies that require the Trust to make significant estimates
and assumptions. The following are some of the more critical judgment areas
in the application of accounting policies that currently affect the Trusts
financial condition and results of operations. 1. New Accounting Pronouncements Statement of Financial Accounting Standards (SFAS) No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure, an
amendment of FASB Statement No. 123, was issued in December 2002 and
provides new transition methods if an entity adopts the fair value based
method of valuing stock-based compensation suggested in SFAS No. 123,
Accounting for Stock-Based Compensation, as well as requiring additional
disclosures in interim
and annual financial statements. The Trust has no options or other
stock-based instruments and accordingly, the impact of this new Standard was
not material to the financial statements of the Trust. SFAS No. 149, Accounting for Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133, was issued in April 2003
and is effective for contracts entered into after June 20, 2003. The
statement amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative instruments embedded in
other contracts. The Trust has no derivative instruments and accordingly, the
impact of this new standard will not be material to the financial statements
of the Trust. SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, was issued in May 2003, and
is effective for fiscal quarters beginning after June 15, 2003. The Trust has
no Financial Instruments and accordingly, the impact of this new standard
will not be material to the financial statements of the Trust. Financial Accounting Standards Board (FASB) Interpretation (FIN) No.
45, Guarantors Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others, requires
disclosures beginning with financial statements ending after December 15,
2002, and requires liability recognition beginning January 1, 2003. The Trust
had no such guarantees outstanding as of December 31, 2003. FIN No. 46, Consolidation of Variable Interest Entities, was issued in
January 2003. This interpretation of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, applies immediately to variable interest
entities created after January 31, 2003 and applies to the first period
beginning after June 15, 2003, to entities acquired before February 1, 2003.
This FIN does not affect the Trust as it has no unconsolidated subsidiaries
accounted for under the equity method of accounting. 2. Basis of Accounting The financial statements of the Trust are prepared on a modified cash
basis and are not intended to present financial position and results of
operations in conformity with United States Generally Accepted Accounting
Principles (GAAP). Preparation of the Trusts financial statements on such
basis includes the following:  
    
    Royalty income and interest income are recorded in the period in which
amounts are received by the Trust rather than in the month of production or
when earned.
    
    General and administrative expenses are recorded based on liabilities paid
and cash reserves established out of cash received.
    
    Amortization of the Royalty Interests is calculated on a
unit-of-production basis and charged directly to Trust corpus based upon
when revenue is received.
    
    Distributions to Unitholders are recorded when declared by the Trustee
(see Note 5). 33




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The financial statements of the Trust differ from financial statements
prepared in accordance with GAAP because royalty income is not accrued in the
period of production, general and administrative expenses recorded are based
on liabilities paid and cash reserves established out of cash received
(rather than on an accrual basis), and amortization of the Royalty Interests
is not charged against operating results. 3. Impairment The net amount of Royalty Interests in gas properties is limited to the
sum of the future net cash flows attributable to the Trusts gas reserves at
year end using current unescalated product prices. If the net cost of
Royalty Interests in gas properties exceeds the aggregate of these amounts,
an impairment provision is recorded and charged to the Trust Corpus. 4. Revenue Recognition Revenues from Royalty Interests are recognized in the period in which
amounts are received by the Trust. Royalty income received by the Trust in a
given calendar year will generally reflect the proceeds, on an entitlements
basis, from natural gas produced for the twelve-month period ended September
30th in that calendar year. 5. Reserve Disclosure Independent petroleum engineers estimate the net proved reserves
attributable to the Royalty Interest. In accordance with SFAS No. 69,
Disclosures About Oil and Gas Producing Activities, estimates of future net
revenues from proved reserves have been prepared using year-end contractual
gas prices and related costs. Numerous uncertainties are inherent in
estimating volumes and the value of proved reserves and in projecting future
production rates and the timing of development of non-producing reserves.
Such reserve estimates are subject to change as additional information
becomes available. The reserves actually recovered and the timing of
production may be substantially different from the reserve estimates. 6. Contingencies Contingencies related to the Underlying Properties that are unfavorably
resolved would generally be reflected by the Trust as reductions to future
royalty income payments to the Trust with corresponding reductions to cash
distributions to Unitholders. The Trustee is aware of no such items as of
December 31, 2003. 
 Liquidity and Capital Resources As stipulated in the Trust Agreement, the Trust is intended to be
passive in nature and neither the Delaware Trustee nor the Trustee has any
control over or any responsibility relating to the operation of the
Underlying Properties. The Trustee has powers to collect and distribute
proceeds received by the Trust and pay Trust liabilities and expenses and its
actions have been limited to those activities. The assets of the Trust are
passive in nature, and other than the Trusts ability to periodically borrow
money as necessary to pay expenses, liabilities and obligations of the Trust
that cannot be paid out of cash held by the Trust, the Trust is prohibited
from engaging in borrowing transactions. As a result, other than such
borrowings, if any, the Trust has no source of liquidity or capital resources
other than the Royalty Interests. See the earlier discussions in Item 7 for
the discussion of the operations and cash inflows and outflows of the Trust. 
 Off-Balance Sheet Arrangements As stipulated in the Trust Agreement, the Trust is intended to be
passive in nature and neither the Delaware Trustee nor the Trustee has any
control over or any responsibility relating to the operation of the
Underlying Properties. The Trustee has powers to collect and distribute
proceeds received by the Trust and pay Trust liabilities and expenses and its
actions have been limited to those activities. Therefore, the Trust has not
engaged in any off-balance sheet arrangements. 34




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Tabular Disclosure of Contractual Obligations. Payments Due by PeriodContractual Obligations
    
    Total
    
    Less than 1 Year
    
    1 - 3 Years
    
    3-5 Years
    
    More than 5 YearsDistribution declared
subsequent to year end
    
    $
    4,466,474
    
    
    $
    4,466,474
    
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    $
    4,466,474
    
    
    $
    4,466,474
    
    
    
    0
    
    
    
    0
    
    
    
    0
 The
above payable relates to distributions declared March 1, 2004 and
payable March 10, 2004. 
 Forward-Looking Statements This Annual Report includes forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, which are
intended to be covered by the safe harbor created thereby. All statements
other than statements of historical fact included in this Annual Report are
forward-looking statements. Such statements include, without limitation,
factors affecting the price of oil and natural gas contained in Item 1,
Business, certain reserve information and other statements contained in
Item 2, Properties, and certain statements regarding the Trusts financial
position, industry conditions and other matters contained in this Item 7.
Although the Trustee believes that the expectations reflected in such
forward-looking statements are reasonable, such expectations are subject to
numerous risks and uncertainties and the Trustee can give no assurance that
they will prove correct. There are many factors, none of which is within the
Trustees control, that may cause such expectations not to be realized,
including,
among other things, factors identified in this Annual Report affecting oil
and gas prices and the recoverability of reserves, general economic
conditions, actions and policies of petroleum-producing nations and other
changes in the domestic and international energy markets. 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The Trust invests in no derivative financial instruments and has no
foreign operations or long-term debt instruments. The assets of the Trust
are passive in nature, and other than the Trusts ability to periodically
borrow money as necessary to pay expenses, liabilities and obligations of the
Trust that cannot be paid out of cash held by the Trust, the Trust is
prohibited from engaging in borrowing transactions. The amount of any such
borrowings is unlikely to be material to the Trust. The Trust periodically
holds short-term investments acquired with funds held by the Trust pending
distribution to Unitholders and funds held in reserve for the payment of
Trust expenses and liabilities. Because of the short-term nature of these
borrowings and investments and certain limitations upon the types of such
investments that may be held by the Trust, the Trustee believes that the
Trust is not subject to any material interest rate risk. The Trust does not
engage in transactions in foreign currencies that could expose the Trust or
Unitholders to any foreign currency related market risk. 35




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data. INDEPENDENT AUDITORS REPORT To Unitholders of Dominion Resources Black Warrior Trust and Bank of America,
N.A., Trustee We have audited the accompanying statements of assets, liabilities and
trust corpus of Dominion Resources Black Warrior Trust (the Trust) as of
December 31, 2003 and 2002, and the related statements of distributable
income and changes in trust corpus for each of the three years in the period
ended December 31, 2003. These financial statements are the responsibility
of the Trustee. Our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion. As described in Note 2 to the financial statements, these statements
were prepared on a modified cash basis of accounting, which is a
comprehensive basis of accounting other than accounting principles generally
accepted in the United States of America. In our opinion, such financial statements present fairly, in all
material respects, the assets, liabilities and trust corpus of the Trust at
December 31, 2003 and 2002, and the distributable income and changes in trust
corpus for each of the three years in the period ended December 31, 2003, on
the basis of accounting described in Note 2. DELOITTE & TOUCHE LLP Dallas, Texas  36




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##### Table of Contents



DOMINION RESOURCES BLACK WARRIOR TRUST FINANCIAL STATEMENTS Statements of Assets, Liabilities and Trust Corpus December 31,2003
    
    2002ASSETSCash and cash equivalents
    
    $
    87,026
    
    
    $
    103,220Royalty interests in gas properties (less accumulated
amortization of $111,084,133 and $105,354,683, respectively)
    
    
    44,733,367
    
    
    
    50,462,817Total Assets
    
    $
    44,820,393
    
    
    $
    50,566,037LIABILITIES AND TRUST CORPUSTrust expenses payable
    
    $
    130,813
    
    
    $
    124,348Trust corpus (7,850,000 units of beneficial interest
authorized, issued and outstanding)
    
    
    44,689,580
    
    
    
    50,441,689Total Liabilities and Trust Corpus
    
    $
    44,820,393
    
    
    $
    50,566,037
 Statements of Distributable Income Year Ended December 31,2003
    
    2002
    
    2001Royalty income
    
    $
    20,746,843
    
    
    $
    19,418,476
    
    
    $
    25,937,254Interest income
    
    
    12,584
    
    
    
    16,022
    
    
    
    54,66420,759,427
    
    
    
    19,434,498
    
    
    
    25,991,918General and administrative expenses
    
    
    (923,785
    )
    
    
    (810,557
    )
    
    
    (776,431
    )Distributable income
    
    $
    19,835,642
    
    
    $
    18,623,941
    
    
    $
    25,215,487Distributable income per unit (7,850,000 units)
    
    $
    2.53
    
    
    $
    2.37
    
    
    $
    3.21Distributions per unit
    
    $
    2.53
    
    
    $
    2.37
    
    
    $
    3.21
 Statements of Changes in Trust Corpus Year Ended December 31,2003
    
    2002
    
    2001Trust corpus, beginning of period
    
    $
    50,441,689
    
    
    $
    57,707,439
    
    
    $
    65,575,056Amortization of royalty interests
    
    
    (5,729,450
    )
    
    
    (7,263,029
    )
    
    
    (7,887,390
    )Distributable income
    
    
    19,835,642
    
    
    
    18,623,941
    
    
    
    25,215,487Distributions to Unitholders
    
    
    (19,858,301
    )
    
    
    (18,626,662
    )
    
    
    (25,195,714
    )Trust corpus, end of period
    
    $
    44,689,580
    
    
    $
    50,441,689
    
    
    $
    57,707,439
 The accompanying notes are an integral part of these financial statements. 37




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Notes to Financial Statements Years Ended December 31, 2003, 2002 and 2001
 1. Trust Organization and Provisions Dominion Resources Black Warrior Trust (the Trust) was formed as a
Delaware business trust pursuant to the terms of the Trust Agreement of
Dominion Resources Black Warrior Trust (as amended, the Trust Agreement),
entered into effective as of May 31, 1994, among Dominion Black Warrior
Basin, Inc., an Alabama corporation (the Company), as trustor; Dominion
Resources, Inc., a Virginia corporation (Dominion Resources); and Bank of
America, N.A. (as successor to NationsBank of Texas, N.A.), a national
banking association (the Trustee); and Mellon Bank (DE) National
Association, a national banking association (the Delaware Trustee), as
trustees. The Trustees are independent financial institutions. The Trust is a grantor trust formed to acquire and hold certain
overriding royalty interests (the Royalty Interests) burdening proved
natural gas properties located in the Pottsville coal formation of the Black
Warrior Basin, Tuscaloosa County, Alabama (the Underlying Properties) owned
by the Company. The Trust was initially created by the filing of its
Certificate of Trust with the Delaware Secretary of State on May 31, 1994.
In accordance with the Trust Agreement, the Company contributed $1,000 as the
initial corpus of the Trust. On June 28, 1994, the Royalty Interests were
conveyed to the Trust by the Company pursuant to the Overriding Royalty
Conveyance (the Conveyance), effective as of June 1, 1994, from the Company
to the Trust, in consideration for all the 7,850,000 authorized units of
beneficial interest (Units) in the Trust. The Company transferred all the
Units to its parent, Dominion Energy, Inc., a Virginia corporation (Dominion
Energy), which in turn transferred all the Units to its parent, Dominion
Resources, Inc., a Virginia corporation (Dominion Resources), which sold an
aggregate of 6,904,000 Units to the public through various underwriters (the
Underwriters) in June and August 1994 and the remaining 946,000 Units
through certain of the Underwriters in June 1995. All of the production attributable to the Underlying Properties is from
the Pottsville coal formation and is coal seam gas that entitled the owners
of such production to tax credits pursuant to Section 29 of the Internal
Revenue Code of 1986, as amended (the Code), upon the production and sale
of such gas before January 1, 2003, provided certain requirements were
satisfied. The Trustee has all powers to collect and distribute proceeds received
by the Trust and to pay Trust liabilities and expenses. The Delaware Trustee
has only such powers as are set forth in the Trust Agreement or are required
by law and is not empowered to otherwise manage or take part in the
management of the Trust. The Royalty Interests are passive in nature and
neither the Trustee nor the Delaware Trustee has any control over, or any
responsibility relating to, the operation of the Underlying Properties or the
Companys interest therein. The Trust is subject to termination under certain circumstances
described in the Trust Agreement. Upon the termination of the Trust, all
Trust assets will be sold and the net proceeds therefrom distributed to
Unitholders. The only assets of the Trust, other than cash and temporary investments
being held for the payment of expenses and liabilities and for distribution
to Unitholders, are the Royalty Interests. The Royalty Interests consist of
overriding royalty interests burdening the Companys interest in the
Underlying Properties. The Royalty Interests generally entitle the Trust to
receive 65 percent of the Companys Gross Proceeds (as defined below). The
Royalty Interests are non-operating interests and bear only expenses related
to property, production and related taxes (including severance taxes).
Gross Proceeds consist generally of the aggregate amounts received by the
Company attributable to the interests of the Company in the Underlying
Properties from the sale of coal seam gas at the central delivery points in
the gathering system for the Underlying Properties. The definitions,
formulas and accounting procedures and other terms governing the computation
of the Royalty Interests are set forth in the Conveyance. 38




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Because of the passive nature of the Trust and the restrictions and
limitations on the powers and activities of the Trustee contained in the
Trust Agreement, the Trustee does not consider any of the officers and
employees of the Trustee to be officers or executive officers of the
Trust as such terms are defined under applicable rules and regulations
adopted under the Securities Exchange Act of 1934. 2. Basis of Accounting The financial statements of the Trust are prepared on a modified cash
basis and are not intended to present financial position and results of
operations in conformity with United States Generally Accepted Accounting
Principles (GAAP). Preparation of the Trusts financial statements on such
basis includes the following:  
    
    Royalty income and interest income are recorded in the period in which
amounts are received by the Trust rather than in the month of production or
when earned.
    
    General and administrative expenses are recorded based on liabilities paid
and cash reserves established out of cash received.
    
    Amortization of the Royalty Interests is calculated on a
unit-of-production basis and charged directly to trust corpus based upon
when revenue is received.
    
    Distributions to Unitholders are recorded when declared by the Trustee
(see Note 5). The financial statements of the Trust differ from financial statements
prepared in accordance with GAAP because royalty income is not accrued in the
period of production, general and administrative expenses recorded are based
on liabilities paid and cash reserves established out of cash received
(rather than on an accrual basis), and amortization of the Royalty Interests
is not charged against operating results. Use of Estimates The preparation of financial statements in conformity with the basis of
accounting described above requires management to make estimates and
assumptions that affect reported amounts of certain assets, liabilities,
revenues and expenses as of and for the reporting periods. Actual results
may differ from such estimates. Impairment Trust management routinely reviews its Royalty Interests in oil and gas
properties for impairment whenever events or circumstances indicate that the
carrying amount of an asset may not be recoverable. If an impairment event
occurs and it is determined that the carrying value of the Trusts Royalty
Interests may not be recoverable, an impairment will be recognized as
measured by the amount by which the carrying amount of the Royalty Interests
exceeds the fair value of these assets, which would likely be measured by
discounting projected cash flows. Distributable Income Per Unit Basic earnings per share is computed by dividing net income by the
weighted average shares outstanding. Earnings per share assuming dilution
is computed by dividing net income by the weighted average number of shares
and equivalent shares outstanding. The Trust had no equivalent shares
outstanding for any period presented, thus basic diluted earnings per unit
and distributable income per unit are the same. New Accounting Pronouncements SFAS No. 148, Accounting for Stock-Based Compensation  Transition and
Disclosure, an amendment of FASB Statement No. 123, was issued in December
2002 and provides new transition methods if an entity adopts the fair value
based method of valuing stock-based compensation suggested in SFAS No. 123,
Accounting for Stock-Based Compensation, as well as requiring additional
disclosures in interim and annual financial statements. The Trust has no
options or other stock-based instruments and accordingly, the impact of this
new Standard was not material to the financial statements of the Trust. 39




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SFAS No. 149, Accounting for Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133, was issued in April 2003
and is effective for contracts entered into after June 20, 2003. The
statement amends and clarifies financial accounting and reporting for
derivative instruments, including certain derivative
instruments embedded in other contracts. The Trust has no derivative
instruments and accordingly, the impact of this new standard will not be
material to the financial statements of the Trust. SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, was issued in May 2003, and
is effective for fiscal quarters beginning after June 15, 2003. The Trust has
no Financial Instruments and accordingly, the impact of this new standard
will not be material to the financial statements of the Trust. FIN No. 45, Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others,
requires disclosures beginning with financial statements ending after
December 15, 2002, and requires liability recognition beginning January 1,
2003. The Trust had no such guarantees outstanding as of December 31, 2003. FIN No. 46, Consolidation of Variable Interest Entities, was issued in
January 2003. This interpretation of Accounting Research Bulletin No. 51,
Consolidated Financial Statements, applies immediately to variable interest
entities created after January 31, 2003, and applies to the first period
beginning after June 15, 2003, to entities acquired before February 1, 2003.
This FIN does not affect the Trust as it has no unconsolidated subsidiaries
accounted for under the equity method of accounting. 3. Federal Income Taxes The Trust is a grantor trust for Federal income tax purposes. As a
grantor trust, the Trust will not be required to pay Federal or state income
taxes. Accordingly, no provision for income taxes has been made in these
financial statements. Because the Trust will be treated as a grantor trust, and because a
Unitholder will be treated as directly owning an interest in the Royalty
Interests, each Unitholder will be taxed directly on his per Unit pro rata
share of income attributable to the Royalty Interests consistent with the
Unitholders method of accounting and without regard to the taxable year or
accounting method employed by the Trust. Production from coal seam gas wells drilled after December 31, 1979 and
prior to January 1, 1993, qualified for the Federal income tax credit for
producing nonconventional fuels under Section 29 of the Code. This tax
credit was calculated annually based on each years qualified production, and
Dominion Resources provided the Trustee with Section 29 tax credit
information related to the Underlying Properties. Coal seam gas produced and
sold after December 31, 2002, will no longer generate a Section 29 tax credit
unless the Section 29 tax credit is extended or reinstated by Congress.
Legislation currently proposed to extend the Section 29 tax credit does not
apply to coal seam gas attributable to the Underlying Properties. The Section 29 tax credit may be available to Unitholders with respect
to the first quarter of 2003 because, among other reasons, it is attributable
to coal seam gas produced and sold on or before December 31, 2002. The
Trustee is seeking a private letter ruling from the Internal Revenue Service
(IRS) on this issue. The estimated Section 29 tax credit, if allowed on
such distributions, equals $0.20 per Unit. The Section 29 tax credit is based on the Unitholders pro rata share of
qualifying production. It can be used only to the extent that a Unitholders
regular tax liability exceeds the Unitholders tentative minimum tax
liability after the regular tax liability has been reduced by the foreign tax
credit and certain nonrefundable personal credits. Any part of the Section
29 tax credit not allowed for the tax year solely because of this alternative
minimum tax limitation is subject to certain carryover provisions relating to
the alternative minimum tax calculation. Except for the foregoing, there are
no Code provisions that allow for the carryback or carryforward of Section 29
tax credits in any other circumstances. As the carryforward of unused
Section 29 tax credits is related to the alternative minimum tax calculation
for succeeding years, carryforwards should be allowed even if the Section 29
tax credit is not extended or reinstated after 2002. In 1997, the Tax Court upheld the IRS position that nonconventional fuel
such as coal seam gas does not qualify for the Section 29 tax credit unless
the producer received a formal certification from the Federal Energy
Regulatory Commission (FERC). FERCs certification authority expired
effective January 1, 1993. During March 1999, the U.S. Court of Appeals for
the 10th Circuit affirmed that decision. The appeal (which is not binding as
precedent) suggests that 40




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##### Table of Contents



lack of a certification from FERC may render the
Section 29 tax credit unavailable in respect of production from wells
recompleted in a qualified formation after January 1, 1993, the date that
FERCs certification authority expired (so that obtaining the requisite
determination of any such well was impossible). Many producers
believe that wells meeting the certification requirements are eligible for
the Section 29 tax credit regardless of FERC certification. However, this
position is not in accordance with the IRS position, the decision of the Tax
Court or the decision of the U.S. Court of Appeals. On December 23, 1999, a petition was filed with FERC by a coalition of
energy producers seeking reinstatement of the certification process. FERC
issued a Final Rule on July 14, 2000, amending its regulations to reinstate
provisions for well category determinations under section 503 of the Natural
Gas Policy Act (NGPA) of 1978 for Section 29 tax credits. The Final Rule
extended the provisions to all wells spudded before January 1, 1993, and
recompletions both before and after that date that qualify for the Section 29
tax credit. The Final Rule also provided for the designation of new tight
formations. The Final Rule became effective on September 25, 2000. During 2002, Dominion Resources initiated a review of all recompletion
activity on the Underlying Properties since 1992 and caused applications for
NGPA determinations for 383 wells to be filed with the Alabama Oil and Gas
Board (the Board) on April 29, 2002. A formal hearing by the Board was
held on May 29, 2002. At that hearing, affirmative notices for 75 of the 383
wells were issued. A second hearing was held on July 10, 2002, which
favorably adjudicated the remaining 308 wells. Applications were timely
filed with FERC and barring timely filed objections, the applications are
accepted as final 45 days after receipt. To the best of Dominion Resources
knowledge, no objections were filed to these applications. The ability of
the Unitholders to utilize Section 29 tax credits (to the extent the Section
29 tax credit is available) could be in question during any time period a
well was not certified, although arguments exist for retroactive application
and for allowance of the Section 29 tax credits without certification. Each Unitholder should consult his tax advisor regarding Trust tax
compliance matters. 4. Related Party Transactions Dominion Resources provides accounting, bookkeeping and informational
services to the Trust in accordance with an Administrative Services Agreement
dated effective June 1, 1994. During 2003 this fee was $388,582 and will
increase annually by three percent. Aggregate fees paid by the Trust to
Dominion Resources in 2003, 2002 and 2001 were $388,582, $380,031 and
$373,552, respectively. Aggregate fees and expense reimbursements paid by the Trust to the
Trustees in 2003, 2002, and 2001 were $43,852, $43,003 and $42,355,
respectively. 5. Distributions to Unitholders The Trustee determines for each calendar quarter the amount of cash
available for distribution to Unitholders. Such amount (the Quarterly
Distribution Amount) is an amount equal to the excess, if any, of the cash
received by the Trust attributable to production from the Royalty Interests
during such quarter, provided that such cash is received by the Trust on or
before the last business day prior to the 45th day following the end of such
calendar quarter, plus the amount of interest expected by the Trustee to be
earned on such cash proceeds during the period between the date of receipt by
the Trust of such cash proceeds and the date of payment to the Unitholders of
such Quarterly Distribution Amount, plus all other cash receipts of the Trust
during such quarter (to the extent not distributed or held for future
distribution as a Special Distribution Amount (as defined below) or included
in the previous Quarterly Distribution Amount) (which might include sales
proceeds not sufficient in amount to qualify for a special distribution as
described in the next paragraph), over the liabilities of the Trust paid
during such quarter and not taken into account in determining a prior
Quarterly Distribution Amount, subject to adjustments for changes made by the
Trustee during such quarter in any cash reserves established for the payment
of contingent or future obligations of the Trust. An amount that is not
included in the Quarterly Distribution Amount for a calendar quarter because
such amount is received by the Trust after the last business day prior to the
45th day following the end of such calendar quarter will be included in the
Quarterly Distribution Amount for the next calendar quarter. The Quarterly
Distribution Amount for each quarter will be payable to Unitholders of record
on the 60th day following the end of such calendar quarter unless such day is
not a business day in which case the record date is the next business day
thereafter. The Trustee will distribute the Quarterly Distribution Amount
for each quarter on or prior to 70 days after the end of such calendar
quarter to each person who was a Unitholder of record on the record date for
such calendar quarter. 41




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The Royalty Interests may be sold under certain circumstances and will
be sold following termination of the Trust. A special distribution will be
made of undistributed net sales proceeds and other amounts received by the
Trust aggregating in excess of $10 million (a Special Distribution Amount).
The record date for a Special Distribution Amount will be the 15th day
following the receipt by the Trust of amounts aggregating a Special
Distribution Amount (unless such day is not a business day, in which case the
record date will be the next business day thereafter) unless
such day is within 10 days or less prior to the record date for a Quarterly
Distribution Amount, in which case the record date for the Special
Distribution Amount will be the same as the record date for the Quarterly
Distribution Amount. Distribution to Unitholders of a Special Distribution
Amount will be made no later than 15 days after the Special Distribution
Amount record date. 6. Subsequent Events Subsequent to December 31, 2003, the Trust declared and paid the
following distribution: Quarterly
    
    
    
    
    
    DistributionRecord Date
    
    Payment Date
    
    per UnitMarch 1, 2004
    
    March 10, 2004
    
    $
    .568977
 7. Quarterly Financial Data (Unaudited) The following table sets forth the royalty income, distributable income
and distributable income per Unit of the Trust for each quarter in the years
ended December 31, 2003 and 2002 (in thousands, except per Unit amounts): Royalty
    
    Distributable
    
    DistributableCalendar Quarter
    
    Income
    
    Income
    
    Income per Unit2003First
    
    $
    5,229
    
    
    $
    4,950
    
    
    $
    .63Second
    
    
    5,707
    
    
    
    5,498
    
    
    
    .70Third
    
    
    5,094
    
    
    
    4,850
    
    
    
    .62Fourth
    
    
    4,717
    
    
    
    4,538
    
    
    
    .58$
    20,747
    
    
    $
    19,836
    
    
    $
    2.532002First
    
    $
    4,659
    
    
    $
    4,441
    
    
    $
    .58Second
    
    
    4,752
    
    
    
    4,558
    
    
    
    .58Third
    
    
    5,122
    
    
    
    4,904
    
    
    
    .62Fourth
    
    
    4,885
    
    
    
    4,721
    
    
    
    .59$
    19,418
    
    
    $
    18,624
    
    
    $
    2.37
 Selected 2003 fourth quarter data are as follows (in thousands, except
per Unit amounts): Royalty income
    
    $
    4,717Interest income
    
    
    2General and administrative expenses
    
    
    (181
    )Distributable income
    
    $
    4,538Distributable income per Unit
    
    $
    .58Distributions per Unit
    
    $
    .58
 Due to significant revisions in estimate of reserve quantities (see Note
8), estimated amortization of royalty interests decreased by approximately
$0.1 million, increased by approximately $0.1 million and decreased by
approximately $0.1 million during the fourth quarters of 2003, 2002 and 2001,
respectively. These adjustments did not have an impact on the Trusts
distributable income. 42




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##### Table of Contents



8. Supplemental Gas Disclosure (Unaudited) The net proved reserves attributable to the Royalty Interests have been
estimated as of December 31, 2003, 2002, 2001, and January 1, 2001, by
independent petroleum engineers. In accordance with Statement of Financial Accounting Standards No. 69,
estimates of proved reserves and future net cash flows from proved reserves
have been prepared using contractually guaranteed prices and end-of-period
natural gas prices, and related costs. The standardized measure of future
net cash flows from the gas reserves is calculated based on discounting such
future net cash flows at an annual rate of 10 percent. The prices for
December 31, 2003, 2002, and January 1, 2002, were $5.89, $4.10 and $2.63 per
Mcf, respectively, including the effect of the Gas Purchase Agreement (see
Note 9). As of February 17, 2004, published Gas prices were approximately
$5.66 per Mcf.
The use of such price as compared to $5.42 per Mcf, which was used to
calculate the above information, would result in a larger standardized
measure of discounted future net cash flows for Gas. Numerous uncertainties are inherent in estimating volumes and value of
proved reserves and in projecting future production rates and timing of
development expenditures. Such reserve estimates are subject to change as
additional information becomes available. The reserves actually recovered
and the timing of production may be substantially different from the original
estimates. The reserve estimates for the Royalty Interests are based on a
percentage share of the Companys Gross Proceeds payable to the Trust of 65
percent. Proved developed reserves at January 1, 2001
    
    
    56,768Revisions of previous estimates
    
    
    897Production
    
    
    (6,701
    )Proved developed reserves at December 31, 2001
    
    
    50,964Revisions of previous estimates
    
    
    (2,422
    )Production
    
    
    (5,957
    )Proved developed reserves at December 31, 2002
    
    
    42,585Revisions of previous estimates
    
    
    4,138Production
    
    
    (5,137
    )Proved developed reserves at December 31, 2003
    
    
    41,586
 All proved reserve estimates presented above at December 31, 2003, 2002,
2001, and January 1, 2001, are proved developed. Proved developed reserves, all located in the United States, for the
Trusts Interests are estimated quantities of coal seam gas that geological
and engineering data indicate with reasonable certainty to be recoverable in
future years from the coal formation under existing economic and operating
conditions. The Trustss proved developed reserves are proved reserves that
can be expected to be recovered through existing wells with existing
equipment and operating methods. Estimated economic quantities were
determined considering the Section 29 tax credits until December 31, 2002.
As discussed in Note 3, coal seam gas produced and sold after December 31,
2002, will no longer generate a Section 29 tax credit unless the Section 29
tax credit is extended or reinstated by Congress. The following table sets forth the standardized measure of discounted
estimated future net cash flows from proved reserves at December 31, 2003,
2002 and 2001 relating to the Trusts Royalty Interests (thousands of
dollars): 2003
    
    2002
    
    2001Future cash inflows
    
    $
    225,561
    
    
    $
    174,543
    
    
    $
    141,190Future taxes
    
    
    (13,534
    )
    
    
    (10,473
    )
    
    
    (6,712
    )Future net cash flows
    
    
    212,027
    
    
    
    164,070
    
    
    
    134,47810% annual discount for estimated timing
of cash flow
    
    
    (94,743
    )
    
    
    (68,507
    )
    
    
    (49,234
    )Standardized measure of discounted
future net cash flows
    
    $
    117,284
    
    
    $
    95,563
    
    
    $
    85,244
 43




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##### Table of Contents



Future cash flows do not include Section 29 tax credits, which no longer
apply for coal seam gas produced and sold after December 31, 2002, as
discussed in Note 3. The following table sets forth the changes in the present value of estimated
future net cash flows from proved reserves during the period ended December
31, 2003, 2002 and 2001 (thousands of dollars): 2003
    
    2002
    
    2001Balance at beginning of period
    
    $
    95,563
    
    
    $
    85,244
    
    
    $
    271,050Increase (decrease) due to:Royalty income, net of taxes
    
    
    (20,269
    )
    
    
    (19,988
    )
    
    
    (25,515
    )Changes in prices
    
    
    30,434
    
    
    
    48,600
    
    
    
    (260,906
    )Changes in estimated volumes
    
    
    2,000
    
    
    
    (26,817
    )
    
    
    73,510Accretion of discount
    
    
    9,556
    
    
    
    8,524
    
    
    
    27,105Balance at December 31
    
    $
    117,284
    
    
    $
    95,563
    
    
    $
    85,244
 9. Gas Purchase Agreement El Paso Merchant EnergyGas, L.P. (El Paso) , as successor to Sonat
Marketing Company (Sonat Marketing) was required under a gas purchase
agreement to purchase the gas produced from the Underlying Properties until
such agreement was terminated, effective January 31, 2004. Under the
agreement, Sonat Marketing was, in past years, obligated to purchase up to a
specified monthly base quantity (the Index Price Quantity) of gas for a
contract price equal to the Index Price plus a specified premium (between
$.05 and $.07 per MMBtu) over the Index Price. Until December 31, 1998, the
Contract Price paid was subject to a minimum price of $1.85 per MMBtu and a
maximum price of $2.63 per MMBtu. Beginning effective January 1, 1999, the
Contract Price paid was subject to a minimum price of $2.16 per MMBtu and a
maximum price of $3.07 per MMBtu. Beginning effective January 1, 2000
through December 31, 2000, the price paid on Index Price Quantities was
subject to a minimum price of $2.20 and a maximum price of $2.82. Beginning
effective January 1, 2001 through December 31, 2001, the Contract Price paid
was subject to a minimum price of $3.00 per MMBtu and a maximum price of
$5.30 per MMBtu. Beginning effective January 1, 2002 through December 31,
2002, the Contract Price paid was subject to a minimum price of $3.80 per
MMBtu and a maximum price of $5.30 per MMBtu. Until December 31, 2003, the
price payable by El Paso for each MMBtu of Gas produced up to and including
the applicable monthly Fixed Price Quantity shall be $3.68 per MMBtu. Prior
to April 1, 1996, Sonat Marketing was obligated to purchase gas production in
excess of the specified monthly base quantities at the Index Price.
Effective April 1, 1996 through December 31, 2001, the price paid for such
gas production in excess of the specified monthly basis quantities was the
Index Price plus $.02. The Index Price, which is determined on a monthly
basis, was Southern Natural Gas Companys posted index price for deliveries
of gas in Louisiana. Effective February 1, 2004, Gas will be sold on a month
to month basis to various purchasers until such time as a long-term contract
can be secured. 44




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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. 
 Item 9A. Controls and Procedures. As of the end of the period covered by this report, the Trustee carried
out an evaluation of the effectiveness of the design and operation of the
Trusts disclosure controls and procedures pursuant to Exchange Act Rules
13a-15 and 15d-15. Based upon that evaluation, the Trustee concluded that the
Trusts disclosure controls and procedures are effective in timely alerting
the Trustee to material information relating to the Trust required to be
included in the Trusts periodic filings with the Securities and Exchange
Commission. In its evaluation of disclosure controls and procedures, the
Trustee has relied, to the extent considered reasonable, on information
provided by the Company. There has not been any change in the Trusts
internal control over financial reporting during the period covered by this
report that has materially affected, or is reasonably likely to materially
affect, the Trusts internal control over financial reporting. 
 PART III 
 Item 10. Directors and Executive Officers of the Registrant. Directors and Executive Officers. The Trust has no directors or
executive officers. Each of the Trustee and the Delaware Trustee is a
corporate trustee that may be removed as trustee under the Trust Agreement,
with or without cause, at a meeting duly called and held by the affirmative
vote of Unitholders of not less than a majority of all the Units then
outstanding. Any such removal of the Delaware Trustee shall be effective
only at such time as a successor Delaware Trustee fulfilling the requirements
of Section 3807(a) of the Delaware Code has been appointed and has accepted
such appointment, and any such removal of the Trustee shall be effective only
at such time as a successor Trustee has been appointed and has accepted such
appointment. Audit Committee and Nominating Committee.Because the Trust has no
directors, it does not have an audit committee, an audit committee financial
expert or a nominating committee. Compliance withSection 16(a)of the Exchange Act. The Trust has no
directors and officers and knows of no Unitholder that is a beneficial owner
of more than 10 percent of the outstanding Units and is therefore unaware of
any person that failed to report on a timely basis reports required by
Section 16(a) of the Exchange Act. Code of Ethics.Because the Trust has no employees, it does not have a
code of ethics. Employees of the Trustee, Bank of America, N.A., must comply
with the banks code of ethics, a copy of which will be provided to
Unitholders, without charge, upon request made to Bank of America, N.A.,
Trustee, 901 Main Street, 17th Floor, Dallas, Texas 75202, Attention: Ron
Hooper. 
 Item 11. Executive Compensation. The following is a description of certain fees and expenses anticipated
to be paid or borne by the Trust, including fees expected to be paid to
Dominion Resources, the Trustee, the Delaware Trustee, Mellon Investor
Service, L.L.C. (as successor to Chemical Shareholder Services Group, Inc.)
(the Transfer Agent) or their respective affiliates. Ongoing Administrative Expenses.The Trust is responsible for paying
all fees, charges, expenses, disbursements and other costs incurred by the
Trustee in connection with the discharge of its duties pursuant to the Trust
Agreement, including, without limitation, trustee fees, engineering, audit,
accounting and legal fees and expenses, printing and mailing costs, amounts
reimbursed or paid to the Company or Dominion Resources pursuant to the Trust
Agreement or the Administrative Services Agreement and the out-of-pocket
expenses of the Transfer Agent. 45




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##### Table of Contents



Compensation of the Trustee.The Trust Agreement provides that the
Trustee is to be compensated for its administrative services and preparation
of quarterly and annual statements, out of the Trust assets, in an annual
amount of $28,858, plus an hourly charge for services in excess of a combined
total of 350 hours annually at its standard rate, which is currently $125 per
hour. These service fees escalate by three percent annually. The Delaware
Trustee is compensated for its administrative services, in an annual amount
of $5,000, which will be paid by the Trustee. Each of the Trustee and the
Delaware Trustee is entitled to reimbursement for out-of-pocket expenses.
Upon termination of the Trust, the Trustee will receive, in addition to its
out-of-pocket expenses, a termination fee in the amount of $10,000. If the
Trustee resigns and a successor has not been appointed in accordance with the
terms of the Trust
Agreement within 210 days after the notice of resignation is received, the
fee payable to the Trustee will increase significantly until a new trustee is
appointed. During 2003, the Trustee and the Delaware Trustee received total
compensation of $38,858 and $5,000, respectively. Compensation of the Transfer Agent.The Transfer Agent receives a
transfer agency fee of $3.25 annually per account, plus $1.50 for each
certificate issued and $.40 for each check issued (subject to an annual
minimum of $7,200).

     Fees to Dominion Resources.Dominion Resources will receive throughout
the term of the Trust an administrative services fee for accounting,
bookkeeping and other administrative services relating to the Royalty
Interests and the Underlying Properties as described in Item 13 under
Administrative Services Agreement. 
 Item 12. Security Ownership of Certain Beneficial Owners and Management. Security Ownership of Certain Beneficial Owners.The Trustee knows of
no Unitholder that is a beneficial owner of more than five percent of the
outstanding Units. Security Ownership of Management.The Trust has no directors or
executive officers. As of March 1, 2004, neither Bank of America, N.A., the
Trustee, nor Mellon Bank (DE) National Association, the Delaware Trustee,
beneficially owned any Units. Changes in Control.The Trustee knows of no arrangements the operation
of which may at a subsequent date result in a change in control of the
Registrant. 
 Item 13. Certain Relationships and Related Transactions. 
 Administrative Services Agreement Pursuant to the Trust Agreement, Dominion Resources and the Trust
entered into the Administrative Services Agreement, pursuant to which the
Trust is obligated, throughout the term of the Trust, to pay to Dominion
Resources each quarter an administrative services fee for accounting,
bookkeeping and other administrative services relating to the Royalty
Interests and the Underlying Properties. The annual fee, payable in equal
quarterly installments, is currently $38,852 and will increase annually by
three percent. A copy of the Administrative Services Agreement is filed as an exhibit
to this Form 10-K. The foregoing summary of the material provisions of the
Administrative Services Agreement does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the
provisions of the Administrative Services Agreement. 46




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##### Table of Contents



Dominion Resourcess Conditional Right of Repurchase Dominion Resources retains in the Trust Agreement the right to
repurchase all (but not less than all) outstanding Units at any time at which
15 percent or less of the outstanding Units is owned by persons or entities
other than Dominion Resources and its affiliates. Any such repurchase would
generally be at a price equal to the greater of (i) the highest price at
which Dominion Resources or any of its affiliates acquired Units during the
90 days immediately preceding the Determination Date and (ii) the average
closing price of Units on the NYSE for the 30 trading days immediately
preceding the Determination Date. Any such repurchase would be conducted in
accordance with applicable Federal and state securities laws. See
BusinessDescription of the TrustConditional Right of Repurchase. 
 Potential Conflicts of Interest The interests of Dominion Resources and its affiliates and the interests
of the Trust and the Unitholders with respect to the Underlying Properties
could at times be different. The following is a summary of certain conflicts
of interest: Obligations of Company Interests Owner may exceed its share of
distributions and tax credits.As a working interest owner in the
Underlying Properties, the Company Interests Owner is responsible for an
average of approximately 98 percent of the operating costs of the Existing
Wells but only entitled to approximately 28 percent of the revenues
therefrom, after giving effect to the Royalty Interests. Based on the
Reserve Estimate, beginning in the year 2000, the projected operating costs
to be borne by the Company Interests Owner were anticipated to exceed its
projected share of Gross Proceeds and Section 29 tax credits (to the extent
the Section 29 tax credit is available and not expired). The terms of the
Conveyance provide, however, that the Company Interests Owner will make
decisions with respect to the Company Interests pursuant to the standard of a
reasonably prudent operator. Sale or abandonment of Underlying Properties may terminate assurances.
The Company Interests Owners interests may conflict with those of the Trust
and Unitholders in situations involving the sale or abandonment of Underlying
Properties. The Company Interests Owner has the right at any time to sell
any of the Underlying Properties subject to the Royalty Interests and may
abandon a well or lease included in the Underlying Properties if such well or
lease is not capable of producing in commercial quantities, determined before
giving effect to the Royalty Interests. Under certain circumstances, a sale
or abandonment will effectively terminate Dominion Resourcess assurances of
the Company Interests Owners obligation to the Trust with respect to the
Underlying Properties sold or abandoned. Such sales or abandonment may not
be in the best interest of the Trust or the Unitholders. Dominion Resources may profit from contracts with the Trust.The
amount that Dominion Resources may charge for services it renders under the
Administrative Services Agreement is established in such contract at rates
that do not necessarily take into account the actual cost of rendering such
services by Dominion Resources. Accordingly, Dominion Resources may profit
or suffer losses in connection with the performance of such contract. 47




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##### Table of Contents



Item 14. Principal Accounting Fees and Services. Fees for services performed by Deloitte & Touche LLP for the years ended
December 31, 2003 and 2002 are: 2003
    
    2002Audit Fees
    
    $
    79,000
    
    
    $
    74,500Audit-related fees
    
    
    
    
    
    
    Tax fees
    
    
    
    
    
    
    All other fees
    
    
    7,500
    
    
    
    $
    86,500
    
    
    $
    74,500
 As referenced in Item 10 above, the Trust has no audit committee, and as
a result, has no audit committee pre-approval policy with respect to fees
paid to Deloitte & Touche LLP. 
 PART IV 
 
 Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.  (a)
    
    The following documents are filed as a part of this report:  1. Financial Statements (included in Item 8 of this report)  Independent Auditors Report 
Statements of Assets, Liabilities and Trust Corpus as of December 31, 2003 and 2002
Statements of Distributable Income for the years ended December 31, 2003, 2002 and 2001
Statements of Changes in Trust Corpus for the years ended December 31, 2003, 2002 and 2001
Notes to Financial Statements 
  2. Financial Statement Schedules  Financial statement schedules are omitted because of the absence of
conditions under which they are required or because the required
information is included in the financial statements and notes thereto. 
 3. Exhibits ExhibitNumber
    
    
    
    Exhibit3.1
    
    
    
    Trust Agreement of Dominion Resources Black Warrior Trust dated as of May
31, 1994, by and among Dominion Black Warrior Basin, Inc., Dominion
Resources, Inc., Mellon Bank (DE) National Association and NationsBank,
N.A. (as successor to NationsBank of Texas, N.A.) (filed as Exhibit 3.1 to
Dominion Resources, Inc.s Registration Statement* on Form S-3 (No.
33-53513), and incorporated herein by reference).3.2
    
    
    
    First Amendment of Trust Agreement of Dominion Resources Black Warrior
Trust dated as of June 27, 1994, by and among Dominion Black Warrior Basin,
Inc., Dominion Resources, Inc., Mellon Bank (DE) National Association and
NationsBank, N.A. (as successor to NationsBank of Texas, N.A.) (filed as
Exhibit 3.2 to the Registrants Form 10-Q for the quarter ended June 30,
1994 and incorporated herein by reference).10.1
    
    
    
    Overriding Royalty Conveyance dated as of June 28, 1994, from Dominion
Black Warrior Basin, Inc. to Dominion Resources Black Warrior Trust (filed
as Exhibit 10.1 to the Registrants Form 10-Q for the quarter ended June
30, 1994 and incorporated herein by reference).10.2
    
    
    
    Administrative Services Agreement dated as of June 1, 1994, by and between
Dominion Resources, Inc. and Dominion Resources Black Warrior Trust (filed
as Exhibit 10.2 to the Registrants Form 10-Q for the quarter ended June
30, 1994 and incorporated herein by reference).
 48




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit10.3
    
    
    
    Amendment to and Ratification of Overriding Royalty Conveyance dated as of
November 20, 1994, among Dominion Black Warrior Basin, Inc., NationsBank,
N.A. (as successor to NationsBank of Texas, N.A.), and Mellon Bank (DE)
National Association (filed as Exhibit 10.3 to the Registrants Form 10-K
for the year ended December 31, 1994 and incorporated herein by reference).10.4
    
    
    
    Gas Purchase Agreement, dated as of May 3, 1994, between Sonat Marketing
and the Company (filed as Exhibit 10.2 to Dominion Resources, Inc.s
Registration Statement* on Form S-3 (No. 33-53513), and incorporated
herein by reference).10.5
    
    
    
    Amendment to Gas Purchase Agreement dated May 16, 1996, between Sonat
Marketing and the Company (filed as Exhibit 10.1 to the Registrants Form
10-Q for the quarter ended June 30, 1996 and incorporated herein by
reference).10.6
    
    
    
    Amendment to Gas Purchase Agreement dated April 9, 1998, between Sonat
Marketing and the Company (filed as Exhibit 10.6 to the Registrants Form
10-K for the year ended December 31, 1998 and incorporated herein by
reference).10.7
    
    
    
    Amendment to Gas Purchase Agreement dated July 1, 1999, between Sonat
Marketing and the Company (filed as Exhibit 10.7 to the Registrants Form
10-K for the year ended December 31, 1999 and incorporated herein by
reference).10.8
    
    
    
    Amendment to Gas Purchase Agreement dated July 1, 2000, between El Paso
Merchant Energy-Gas, L.P., as successor to Sonat Marketing Company, and the
Company (filed as an exhibit to the Registrants Form 10-Q for the quarter
ended September 30, 2000 and incorporated herein by reference).10.9
    
    
    
    Amendment to Gas Purchase Agreement dated July 1, 2001, between El Paso
Merchant Energy-Gas, L.P., as successor to Sonat Marketing Company, and the
Company (filed as an exhibit to the Registrants Form 10-Q for the quarter
ended September 30, 2001 and incorporated herein by reference).10.10
    
    
    
    Amendment to Gas Purchase Agreement dated July 1, 2002 between El Paso
Merchant Energy-Gas, L.P., as successor to Sonat Marketing Company, and the
Company (filed as an exhibit to the Registrants Form 10-Q for the quarter
ended September 30, 2002 and incorporated herein by reference).23.1
    
    
    
    Consent of Ralph E. Davis Associates, Inc., independent petroleum engineers.31.1
    
    
    
    Certification required by Rule 13a-14(a)/15d-14(a).32.1
    
    
    
    Certification required by
Rule 13a-14(b)/15d-14(b) and Section 906 of the Sarbanes Oxley Act of 2002.99.2
    
    
    
    Summary of Reserve Report, dated February 11, 2004, on the estimated
reserves, estimated future net revenues and the discounted estimated future
net revenues attributable to the Royalty Interests as of January 1, 2004,
prepared by Ralph E. Davis & Associates Petroleum Engineers, independent
petroleum engineers.
   *
    
    On its own behalf and as sponsor of the Dominion Resources Black
Warrior Trust 
  (b)
    
    Reports onForm 8-K. No report on Form 8-K was filed by the Registrant during the last
quarter of the period covered by this report. A report on Form 8-K was
furnished by the Registrant on November 26, 2003, pursuant to Item 12 of Form
8-K announcing the Trusts quarterly distribution. 49




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##### Table of Contents



SIGNATURES Pursuant to the requirements of Section 13 or15(d)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. Dominion Resources Black Warrior TrustBy: Bank of America, N.A., TrusteeBy:
    
    /s/ Ron E. HooperRon E. HooperSenior Vice President and Administrator
 Date: March 11, 2004 (The Registrant has no directors or executive officers.) 50




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##### Table of Contents



Index to Exhibits ExhibitNumber
    
    
    
    Exhibit3.1
    
    
    
    Trust Agreement of Dominion Resources Black Warrior Trust dated as of May
31, 1994, by and among Dominion Black Warrior Basin, Inc., Dominion
Resources, Inc., Mellon Bank (DE) National Association and NationsBank,
N.A. (as successor to NationsBank of Texas, N.A.) (filed as Exhibit 3.1 to
Dominion Resources, Inc.s Registration Statement* on Form S-3 (No.
33-53513), and incorporated herein by reference).3.2
    
    
    
    First Amendment of Trust Agreement of Dominion Resources Black Warrior
Trust dated as of June 27, 1994, by and among Dominion Black Warrior Basin,
Inc., Dominion Resources, Inc., Mellon Bank (DE) National Association and
NationsBank, N.A. (as successor to NationsBank of Texas, N.A.) (filed as
Exhibit 3.2 to the Registrants Form 10-Q for the quarter ended June 30,
1994 and incorporated herein by reference).10.1
    
    
    
    Overriding Royalty Conveyance dated as of June 28, 1994, from Dominion
Black Warrior Basin, Inc. to Dominion Resources Black Warrior Trust (filed
as Exhibit 10.1 to the Registrants Form 10-Q for the quarter ended June
30, 1994 and incorporated herein by reference).10.2
    
    
    
    Administrative Services Agreement dated as of June 1, 1994, by and between
Dominion Resources, Inc. and Dominion Resources Black Warrior Trust (filed
as Exhibit 10.2 to the Registrants Form 10-Q for the quarter ended June
30, 1994 and incorporated herein by reference).10.3
    
    
    
    Amendment to and Ratification of Overriding Royalty Conveyance dated as of
November 20, 1994, among Dominion Black Warrior Basin, Inc., NationsBank,
N.A. (as successor to NationsBank of Texas, N.A.), and Mellon Bank (DE)
National Association (filed as Exhibit 10.3 to the Registrants Form 10-K
for the year ended December 31, 1994 and incorporated herein by reference).10.4
    
    
    
    Gas Purchase Agreement, dated as of May 3, 1994, between Sonat Marketing
and the Company (filed as Exhibit 10.2 to Dominion Resources, Inc.s
Registration Statement* on Form S-3 (No. 33-53513), and incorporated
herein by reference).10.5
    
    
    
    Amendment to Gas Purchase Agreement dated May 16, 1996, between Sonat
Marketing and the Company (filed as Exhibit 10.1 to the Registrants Form
10-Q for the quarter ended June 30, 1996 and incorporated herein by
reference).10.6
    
    
    
    Amendment to Gas Purchase Agreement dated April 9, 1998, between Sonat
Marketing and the Company (filed as Exhibit 10.6 to the Registrants Form
10-K for the year ended December 31, 1998 and incorporated herein by
reference).10.7
    
    
    
    Amendment to Gas Purchase Agreement dated July 1, 1999, between Sonat
Marketing and the Company (filed as Exhibit 10.7 to the Registrants Form
10-K for the year ended December 31, 1999 and incorporated herein by
reference).10.8
    
    
    
    Amendment to Gas Purchase Agreement dated July 1, 2000, between El Paso
Merchant Energy-Gas, L.P., as successor to Sonat Marketing Company, and the
Company (filed as an exhibit to the Registrants Form 10-Q for the quarter
ended September 30, 2000 and incorporated herein by reference).10.9
    
    
    
    Amendment to Gas Purchase Agreement dated July 1, 2001, between El Paso
Merchant Energy-Gas, L.P., as successor to Sonat Marketing Company, and the
Company (filed as an exhibit to the Registrants Form 10-Q for the quarter
ended September 30, 2001 and incorporated herein by reference).10.10
    
    
    
    Amendment to Gas Purchase Agreement dated July 1, 2002 between El Paso
Merchant Energy-Gas, L.P., as successor to Sonat Marketing Company, and the
Company (filed as an exhibit to the Registrants Form 10-Q for the quarter
ended September 30, 2002 and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber
    
    
    
    Exhibit23.1
    
    
    
    Consent of Ralph E. Davis Associates, Inc., independent petroleum engineers.31.1
    
    
    
    Certification required by Rule 13a-14(a)/15d-14(a).32.1
    
    
    
    Certification required by Rule 13a-14(b)/15d-14(b) and Section 906 of the
Sarbanes Oxley Act of 2002.99.1
    
    
    
    The information under the sections captioned Federal Income Tax
Consequences, Risk Factors - Tax Considerations, and ERISA
Considerations of the Prospectus dated June 21, 1994, which constitutes a
part of the Registration Statement on Form S-3 of Dominion Resources, Inc.*
(Registration No. 33-53513) and is incorporated herein by reference.99.2
    
    
    
    Summary of Reserve Report, dated February 11, 2004, on the estimated
reserves, estimated future net revenues and the discounted estimated future
net revenues attributable to the Royalty Interests as of January 1, 2004,
prepared by Ralph E. Davis & Associates Petroleum Engineers, independent
petroleum engineers.
 *  On its own behalf and as
sponsor of the Dominion
Resources Black Warrior Trust