Summary of DOMINION RESOURCES BLACK WARRIOR TRUST

Item 2. Trustee's Discussion and Analysis of Financial Condition and Results of Operations.

Liquidity and Capital Resources

The Trust 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 burdening the Underlying Properties. The Royalty Interests owned by the Trust burden the interest in the Underlying Properties that is owned by the Company, an indirect wholly-owned subsidiary of Walter Energy, LLC.

Distributable income of the Trust 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 quarter may differ from the amount of cash available for distribution to Unitholders in such quarter due to differences in the treatment of the expenses of the Trust in 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 for them. Consequently, the reported distributable income of the Trust for any quarter is determined by deducting from the income received by the Trust the amount of expenses paid by the Trust during such quarter. The amount of cash available for distribution to Unitholders is determined as adjusted for changes in reserves for unpaid liabilities in accordance with the provisions of the Trust Agreement. (See Note 5 to the condensed financial statements of the Trust appearing elsewhere in this Form 10-Q for additional information regarding the determination of the amount of cash available for distribution to Unitholders.)

In March 2012, the Company notified the Trustee that it is undertaking a study of the Underlying Properties on a well-by-well basis to determine the economic viability of continuing to produce each individual well. If the Company decides to suspend production or abandon any such wells, such decision could adversely affect the Trust's future revenue stream, and if a significant number of wells are abandoned, it could cause a termination of the Trust. See "Item 1-Business-Description of the Trust-Termination and Liquidation of the Trust" and "Item 1A-Risk Factors" in the Trust's Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 15, 2012, which is accessible on the SEC's website at www.sec.gov, for additional information.

Results of Operations

Three and Nine Month Periods Ended September 30, 2012 Compared to the Three and Nine Month Periods Ended September 30, 2011

The Trust's 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 Overriding Royalty Conveyance from the Company to the Trust.

The Trust received royalty income amounting to $995,623 during the third quarter of 2012 compared to $2,120,249 during the third quarter of 2011. This revenue was derived from the receipt of cash on production of 505,319 mcf at an average price of $1.97 per mcf after deducting production taxes of $54,199 compared to 522,163 mcf at an average price received of $4.06 per mcf after deducting production taxes of $131,226 in the third quarter of 2011. The Trust received royalty income amounting to $4,022,569 during the nine months ended September 30, 2012 compared to $6,285,238 during the nine months ended September 30, 2011. This revenue was derived from the receipt of cash on production of 1,531 Mmcf at an average price received of $2.61 per mcf after deducting production taxes of $235,841 compared to 1.639 Mmcf at an average price received of $3.83 per mcf after deducting production taxes of $392,518 in the nine months ended September 30, 2011. For the three and nine-month periods ended September 30, 2012, the Trust was negatively impacted by the decrease in natural gas prices and production, as compared with the three and nine-month periods ended September 30, 2011. Natural gas prices are influenced by many factors such as seasonal temperatures, domestic demand and other factors that are beyond the control of the Trustee. The decrease in production volumes is attributed to declining production. Production taxes are based on revenues rather than production volumes. Accordingly, production taxes did not fluctuate proportionately to the decrease in volumes.

Interest income during the third quarter of 2012 amounted to $65 compared to $124 for the same period in 2011. Interest income during the nine months ended September 30, 2012 amounted to $201 compared to $549 for the nine months ended September 30, 2011. This decrease is a result of less funds available in 2012 than in 2011.

General and administrative expenses during the third quarter of 2012 amounted to $220,783 compared to $203,334 in the third quarter of 2011. General and administrative expenses during the nine months ended September 30, 2012 amounted to $845,982 compared to $763,197 for the nine months ended September 30, 2011. For this period, these expenses were primarily related to general and administrative services provided by Walter Exploration & Production, the Trustee and American Stock Transfer & Trust Company, the transfer agent, and the preparation of periodic reports for submission to the SEC and to Unitholders during the period. The increase in general and administrative expenses in the third quarter of 2012 as compared to the third quarter of 2011 is primarily due to additional professional expenses. The increase in general and administrative expenses in the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011 is primarily due to additional professional expenses.

Distributable income for the third quarter of 2012 was $774,905, or $.10 per Unit, compared to distributable income for the third quarter of 2011 of $1,917,039, or $.24 per Unit. Distributable income for the nine months ended September 30, 2012 was $3,176,788, or $.40 per Unit, compared to $5,522,590, or $.70 per Unit for the nine months ended September 30, 2011. The Trust made a distribution on September 7, 2012 of $0.095989 per Unit compared to a distribution of $0.251488 per Unit made during the third quarter of 2011.

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.

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 accounting principles generally accepted in the United States of America. 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 period of production and accrual, respectively.

• General and administrative expenses recorded are 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 when revenues are received.

• Distributions to Unitholders are recorded when declared by the Trustee (see Note 5 to the condensed financial statements).

The financial statements of the Trust differ from financial statements prepared in accordance with accounting principles generally accepted in the United States of America because royalty income is not accrued in the period of production, general and administrative expenses recorded are based on liabilities paid and certain cash reserves that may be established rather than on an accrual basis, and amortization of the Royalty Interests is not charged against operating results. This comprehensive basis of accounting other than accounting principles generally accepted in the United States of America corresponds to the accounting permitted for royalty trusts by the SEC, as specified by Staff Accounting Bulletin Topic 12:E, Financial Statements of Royalty Trusts.

Impairment

The Trustee routinely reviews the Trust's royalty interests in 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. As of September 30, 2012, no impairment is required.

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 and sold for the twelve-month period ended September 30th in that calendar year. Royalty income received by the Trust in the third quarter of 2012 generally reflects the proceeds, on an entitlements basis, from natural gas produced and sold in the second quarter of 2012.

Reserve Disclosure

Independent petroleum engineers estimate the net proved reserves attributable to the Royalty Interests. In accordance with FASB guidance, estimates of future net revenues from proved reserves have been prepared using the average market gas prices over the prior 12-month period or applicable contract price as of December 31, as appropriate, 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.

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 September 30, 2012, other than as stated below.

The Trust is named as a defendant in an action, styled Southwest Royalties, Inc.
v. Dominion Black Warrior Basin, Inc., et al., filed in the Circuit Court of Fayette County Alabama on October 5, 2007 regarding the quieting of title in certain oil and gas rights related to property in Fayette and Tuscaloosa Counties in Alabama. The plaintiff alleges that defendants are knowingly producing gas in violation of the deeds in question. The plaintiff is also alleging conversion of gas, continuing trespass by defendants on the plaintiff's property and suppression of material facts by defendants, and the plaintiff is requesting an accounting, injunctive relief and compensatory and punitive damages, plus court costs and attorneys fees. The Trustee does not believe this litigation will have a material effect on the Trust's financial statements.

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 the reported amounts of certain assets, liabilities, revenues and expenses as of and for the reporting period. Actual results may differ from such estimates.

Distributable Income Per Unit

Basic distributable income per unit is computed by dividing distributable income by the weighted average units outstanding. Distributable income per unit assuming dilution is computed by dividing distributable income by the weighted average number of units and equivalent units outstanding. The Trust had no equivalent units outstanding for any period presented, thus basic distributable income per unit and diluted distributable income per unit are the same.

New Accounting Pronouncements

There are no new accounting pronouncements that are expected to have a significant impact on the Trust's financial statements.

Forward-Looking Statements

This report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact included in this Form 10-Q, including, without limitation, statements contained in this "Trustee's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Trust's financial position and industry conditions, are forward-looking statements. Although the Trustee believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.