<PAGE>   1

RYDER SCOTT COMPANY LOGO                                     FAX (713) 651-0849
1100 LOUISIANA   SUITE 3800  HOUSTON, TEXAS 77002-5218 TELEPHONE (713) 651-9191


                                March 4, 1998

Dominion Black Warrior Basin, Inc.
Riverfront Plaza - West Tower
901 E. Byrd Street
Richmond, Virginia 23219-4072

Gentlemen:

     At your request, we have prepared an estimate of the reserves,future
production, and income attributable to certain royalty interests of Dominion
Resources Royalty Trust 1994-1 (Dominion) as of January 1, 1998. The subject
properties are located in the Black Warrior Basin, Tuscaloosa County, Alabama.
Two cases of reserve estimates based on different pricing parameters provided by
Dominion are presented herein. The income data for Case 1 were estimated using
escalated cost and price parameters. The income data for Case 2 were estimated
using unescalated cost and price parameters.

     It should be noted that due to a combination of economic and political
forces, there is significant uncertainty regarding the forecasting of future
hydrocarbon prices. The recoverable reserves and the income attributable thereto
have a direct relationship to the hydrocarbon prices actually received;
therefore, volumes of reserves actually recovered and amounts of income actually
received may differ significantly from the estimated quantities presented in
this report. A summary of the results of this study is shown below.

                                     CASE 1
                    ESCALATED PARAMETERS - YEAR END PRICING
                     Estimated Net Reserve and Income Data
                          Certain Royalty Interests of
                    DOMINION RESOURCES ROYALTY TRUST 1994-1
                        65% OVERRIDING ROYALTY INTEREST
                             As of January 1, 1998

                _______________________________________________

                <TABLE>
                <CAPTION>
                                                      Total
                                                      Proved
                                                   ------------
                <S>                                <C>
                NET REMAINING RESERVES
                 Gas - MMCF . . . . . . . . . . .        94,466

                INCOME DATA
                 Future Gross Revenue . . . . . .  $289,488,904
                                                   ------------
                 Tax Credits  . . . . . . . . . .    48,421,978
                 Future Net Income (FNI). . . . .  $337,910,882

                Discounted FNI @ 5% . . . . . . .  $240,517,451
                </TABLE>
<PAGE>   2
DOMINION BLACK WARRIOR BASIN, INC.
March 4, 1998
Page 2


                                     CASE 2
                   UNESCALATED PARAMETERS - YEAR END PRICING
                     Estimated Net Reserve and Income Data
                          Certain Royalty Interests of
                    Dominion Resources Royalty Trust 1994-1
                         65% Overriding Royalty Interest
                             As of January 1, 1998

                _______________________________________________

                <TABLE>
                <CAPTION>
                                                      Total
                                                     Proved
                                                  ------------
                <S>                                <C>
                NET REMAINING RESERVES
                 Gas - MMCF . . . . . . . . . . .       94,466

                INCOME DATA
                 Future Gross Revenue  . . . . .   $226,865,481

                 Tax Credits . . . . . .. . . . .    46,871,921
                                                   ------------
                 Future Net Income (FNI). . . . .  $273,737,402

                Discounted FNI @ 5% . . . . . . .  $207,130,059
                </TABLE>

     All gas volumes are sales gas expressed in millions of cubic feet (MMCF)
at the official temperature and pressure bases of the areas in which the gas
reserves are located.

     All of the reserves included herein are comprised of the proved producing
category. The various producing status categories are defined under the tab
"Reserve Definitions and Pricing Assumptions" in this report.

     A Staff Accounting Bulletin (S.A.B.) issued September 18, 1989 allows for
oil and gas producing companies to include coalbed methane gas in their
estimate of proved reserves under SEC guidelines. In accordance with the S.A.B.
dated November 30, 1989 these reserves should be included provided they comply
in all other respects with the definition of proved oil and gas reserves.
Included is the requirement that methane production be economical at current
prices, costs (net of the tax credit) and existing operating conditions. At
your request, the coalbed methane gas reserves presented herein are based on
economic parameters which include your estimates of the future Section 29 Tax
Credit. Your estimates of the future tax credits are presented in detail under
the tab "Reserve Definitions and Pricing Assumptions" in this report.

     The future gross revenue is after the deduction of production taxes and
before the addition of Dominion's estimate of the Section 29 Tax Credit
(presented as "Other Income"). The future net income is before the deduction of
state and federal income taxes and general administrative overhead, and has not
been adjusted for outstanding loans that may exist nor does it include any
adjustment for cash on hand or undistributed income. No attempt was made to
quantify or otherwise account for any accumulated gas production imbalances
that may exist. Gas reserves account for 100 percent of total future gross
revenue from proved reserves.

     The discounted future net income shown was calculated using a discount
rate of 5 percent per annum compounded monthly. Future net income was discounted
at four other discount rates which were also compounded monthly. These results
are shown on each estimated projection of future production and income presented
in a later section of this report and in summary form below.
<PAGE>   3


DOMINION BLACK WARRIOR BASIN, INC.
MARCH 4, 1998
PAGE 3


<TABLE>
<CAPTION>
                             Year End Pricing
                   DOMINION RESOURCES ROYALTY TRUST 1994-1
                      65% OVERRIDING ROYALTY INTEREST
                       Discounted Future Net Income
                          As of January 1, 1998
                             Total Proved
                   ------------------------------------------
<S>                          <C>            <C>
Discount Rate             Escalated           Unescalated
   Percent                   Case                Case
-------------            ----------           -----------

    10                   $186,294,886         $166,698,116
    15                   $152,240,898         $139,659,721
    20                   $128,906,681         $120,274,988
    25                   $111,881,285         $105,657,730

</TABLE>

The results shown above are presented for your information and should not be
construed as our estimate of fair market value.

RESERVES INCLUDED IN THIS REPORT

     Escalated Parameters

     The proved reserves included herein conform to the definition as set forth
in the Securities and Exchange Commission's Regulation S-X Part 210.4-10 (a) as
clarified by subsequent Commission Staff Accounting Bulletins, except that they
are based on cost and price parameters which allow for future changes in
current economic conditions as discussed in other sections of this report;
whereas, the definition approved by the Securities and Exchange Commission
assumes no change in current economic conditions will occur in the future.

     It should be noted that the estimated quantities of reserves presented in
this report, which were based on escalated cost and price parameters, differ
from the quantities of reserves which were estimated using constant cost and
price parameters.

     Unescalated Parameters

     The proved reserves included herein conform to the definition as set forth
in the Securities and Exchange Commission's Regulation S-X Part 210.4-10 (a) as
clarified by subsequent Commission Staff Accounting.

     Our definition of proved reserves is included under the tab "Reserve
Definitions and Pricing Assumptions" in this report.

ESTIMATES OF RESERVES

     In general, the reserves included herein were estimated by performance
methods or the volumetric method; however, other methods were used in certain
cases where characteristics of the data indicated such other methods were more
appropriate in our opinion. The reserves estimated by the performance method
utilized extrapolations of various historical data in those cases where such
data were definitive. Reserves were estimated by the volumetric method in those
cases where there were inadequate historical performance data to establish a
definitive trend or where the use of production performance data as a basis for
the reserve estimates was considered to be inappropriate.

<PAGE>   4
DOMINION BLACK WARRIOR BASIN, INC.
March 4, 1998
Page 4

          The reserves included in this report are estimates only and should
not be construed as being exact quantities. They may or may not be actually
recovered, and if recovered, the revenues therefrom and the actual costs
related thereto could be more or less than the estimated amounts. Moreover,
estimates of reserves may increase or decrease as a result of future operations.

FUTURE PRODUCTION RATES

          Initial production rates are based on the current producing rates for
those wells now on production. Test data and other related information were
used to estimate the anticipated peak production rates for those wells which
are not currently producing at peak rates. If no production decline trend has
been established, future production rates were held constant, or adjusted for
the effects of dewatering where appropriate, until a decline in ability to
produce was anticipated. An estimated rate of decline was then applied to
depletion of the reserves. If a decline trend has been established, this trend
was used as the basis for estimating future production rates.

          In general, we estimate that future gas production rates will
continue to be the same as the average rate for the latest available 12 months
of actual production until such time that the well or wells are incapable of
producing at this rate. The well or wells were then projected to decline at
their decreasing delivery capacity rate. Our general policy on estimates of
future gas production rates is adjusted when necessary to reflect actual gas
market conditions in specific cases.

          The future production rates from wells now on production may be more
or less than estimated because of changes in marketing conditions or allowables
set by regulatory bodies. Wells or locations which are not currently producing
may start producing earlier or later than anticipated in our estimates of their
future production rates.

HYDROCARBON PRICES

     Escalated Parameters

          The future hydrocarbon price parameters used in the escalated pricing
scenario reflect Dominion's current estimates. Estimates of future price
parameters have been revised in the past because of changes in governmental
policies, changes in hydrocarbon supply and demand, and variations in general
economic conditions. There is a possibility that the price parameters used in
this report may be revised in the future for similar reasons.

     Unescalated Parameters

          Dominion furnished us with gas prices in effect at January 1, 1998
and these prices were held constant to depletion of the reserves in the
unescalated pricing scenario.

          Dominion's estimates of future price parameters for gas are presented
in detail under the tab "Reserve Definitions and Pricing Assumptions" in this
report.

COSTS

          The income attributable to Dominion Resources Royalty Trust 1994-1 is
based on a 65 percent overriding royalty interest, and has no associated
deductions or costs. The costs utilized in the evaluation of the leasehold
interest are presented below.

<PAGE>   5
DOMINION BLACK WARRIOR BASIN, INC.
March 4, 1998
Page 5


         Escalated Parameters

                 The escalated case utilized the same operating and cost
parameters as the unescalated except they are escalated according to a scenario
provided by Dominion. Future cost parameters are presented in detail under the
tab "Reserve Definitions and Pricing Assumptions" in this report.

         Unescalated Parameters

                 Operating costs for the leases and wells in the unescalated
case are based on the operating expense reports of Dominion and include only
those costs directly applicable to the leases or wells. When applicable, the
operating costs include a portion of general and administrative costs allocated
directly to the leases and wells under terms of operating agreements. The
current operating costs were held constant throughout the life of the
properties.

                 At the request of Dominion, their estimate of zero net
abandonment costs after salvage value for the properties was used in this
report. Ryder Scott has not performed a detailed study of the abandonment costs
nor the salvage value and makes no warranty for Dominion's estimate. No
deduction was made for indirect costs such as general administration and
overhead expenses, loan repayments, interest expenses, and exploration and
development prepayments that are not charged directly to the leases or wells.

GENERAL

                 Table A presents a one line summary of gross and net reserves
and income data for each of the subject properties. The grand summaries of our
estimated projection of production and income by years beginning January 1, 1998
are presented under the tab "Grant Summary Projections".

                 The estimates of reserves presented herein are based upon a
detailed study of the properties in which Dominion owns an interest, however, we
have not made any field examination of the properties. No consideration was
given in this report to potential environmental liabilities which may exist nor
were any costs included for potential liability to restore and clean up damages,
if any, caused by past operating practices. Dominion has informed us that they
have furnished us all of the accounts, records, geological and engineering data,
and reports and other data required for this investigation. The ownership
interests, prices, and other factual data furnished by Dominion were accepted
without independent verification. The estimates presented in this report are
based on data available through November 1997.

                 Neither we nor any of our employees have any interest in the
subject properties and neither the employment to make this study nor the
compensation is contingent on our estimates of reserves and future income for
the subject properties.

<PAGE>   6
DOMINION BLACK WARRIOR BASIN, INC.
March 4, 1998
Page 6


     This report was prepared for the exclusive use of Dominion Black Warrior
Basin, Inc. The data, work papers, and maps used in the preparation of this
report are available for examination by authorized parties in our offices.
Please contact us if we can be of further service.

                                                  Very truly yours,

                                                  RYDER SCOTT COMPANY
                                                  PETROLEUM ENGINEERS


                                                  /s/ C. PATRICK McINTURFF, P.E.
                                                  ------------------------------
                                                      C. Patrick McInturff, P.E.
                                                      Petroleum Engineer
CPM/sw



Approved:

/s/ JOHN R. WARNER
-------------------------
    John R. Warner
    Senior Vice President