Introduction
On Friday, May 9th, the Supreme Court of Texas addressed important issues regarding the enforcement of written contractual representations in its per curiam opinion styled Roxo Energy Co., LLC et al. v. Baxsto, LLC, --- S.W.3d ---, 2025 WL 1349581 (Tex. May 9, 2025) (per curiam). The Court found in favor of Roxo Energy Co., LLC and its associated entities (collectively, "Roxo") in a case arising from the sale of mineral rights Roxo had originally purchased from Baxsto, LLC ("Baxsto"). The Court held that Baxsto's claims based on alleged oral representations made by Roxo's CEO and private equity investment firm Vortus Investment Advisors, LLC ("Vortus") that contradicted express terms or went unmentioned in the parties' formal written agreements were properly dismissed on summary judgment by the trial court.
Background
A. Facts
In 2016, Baxsto sought a mineral lease with Roxo to develop the minerals it owned in Howard and Borden Counties, Texas. Roxo's CEO purportedly represented that Roxo would give Baxsto the highest lease bonus in relation to other mineral interest owners in the area if it signed the lease quickly, that Roxo was "not in the business of flipping mineral interests," and that Roxo planned to drill the acreage. Vortus also allegedly represented to Baxsto that Vortus only invested in companies that drilled acreage and that it did not engage in the business of "flipping" mineral interests.
Later, after the lease was executed, Baxsto and Roxo began negotiating a sale of Baxsto's leased mineral interests to Roxo, which closed for approximately $5.6 million. Instead of drilling on the acreage, however, Roxo sold the acquired minerals to another operator. Baxsto then learned that Roxo paid another mineral interest owner in the same acreage, Navigator Oil and Gas, a bonus of $11,000 per acre, exceeding the $5,000 per acre bonus paid to Baxsto. Thereafter, Baxsto sued Roxo and Vortus for fraud, fraudulent inducement, statutory fraud, and fraud by non-disclosure based primarily on the oral representations Roxo allegedly made to Baxsto before the sale.
B. Procedural History
The trial court granted summary judgment in favor of Roxo against all of Baxsto's claims. The Eleventh Court of Appeals reversed, holding that Baxsto's reliance on Roxo's oral representations was unjustifiable because the parties' written agreements did not directly contradict Roxo's alleged oral representations. The Supreme Court disagreed and reinstated the trial court's summary judgment in favor of Roxo.
Opinion Analysis
Because each of Baxsto's fraud claims required an element of justifiable reliance, the Court focused its analysis on whether Baxsto could have justifiably relied on Roxo's alleged misrepresentations in light of the parties' written agreements. See Op. at *2. In setting out the applicable law, the Court cited to its prior decisions in which it held that reliance on an oral representation is not justifiable when the representation "is directly contradicted by the express, unambiguous terms of a written agreement." (Op. at *2 (citing JPMorgan Chase Bank, N.A. v. Orca Assets G.P., L.L.C., 546 S.W.3d 648, 652 (Tex. 2018)). The Court concluded that, as to certain alleged misrepresentations by Roxo, Baxsto's purported reliance was not justified.
First, the Court examined Roxo's alleged representations that it would drill and develop the leased acreage. The Court held that Baxsto was not justified in relying on these alleged representations from Roxo because the contracts between Baxsto and Roxo explicitly granted Roxo an "unqualified right to transfer the lease rather than drill," Op. at *3, and this contractual language expressly contradicted any oral representation that Roxo would not subsequently sell the acreage without development. The Court further noted that Roxo was free to negotiate for language restricting the right to transfer, as is common industry practice. See id.
Next, the Court analyzed claims arising out of the lease bonus negotiations. Roxo allegedly represented to Baxsto that Roxo was not paying Navigator Oil and Gas (another lessor in the acreage) a lease bonus higher than $5,000 and that Baxsto's lease bonus would be the highest paid to any lessors in the area. Baxsto alleges that these representations induced it to enter its agreement with Roxo and that Baxsto later learned that Roxo paid a significantly higher bonus to Navigator. The Court held that Baxsto was not justified in relying on these alleged representations because "none of them made it into the parties' agreements." Op. at *4. The Court emphasized Baxsto's experience and sophistication in negotiating leases and observed that the "prudent" approach to ensuring enforceability of representations "is to demand that the parties' discussions be reflected in the writing—not to sign an agreement that makes no mention of the promises and then try to hold your counterparty to them anyway." Op. at *4. Thus, while the Court emphasized caselaw regarding the contradiction between the written agreement and the prior representation, here the focus seems to be on the omission of language supporting the oral representation.
The opinion reinforces the Court's trend of disfavoring "the viability of claims based on alleged oral representations that are inconsistent with the parties' written contracts." Op. at *1; see Energy Transfer Partners, L.P. v. Enter. Products Partners, L.P., 593 S.W.3d 732 (Tex. 2020) (written conditions precedent precluded formation of partnership based on oral representations and parties' conduct); Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471 (Tex. 2019) (plaintiff's claims based on alleged oral promise to never withhold consent failed because written agreement expressly gave lessor right to give or withhold consent); Orca Assets, 546 S.W.3d 648 (fraud claims based on alleged representation that lease acreage was "open" failed in part because representations were contradicted by parties' letter of intent). Parties to sophisticated transactions should remain mindful that Texas courts will enforce contracts as written and refuse to read in additional representations and obligations that do not appear in the four corners of the agreement itself.
Conclusion
Given the considerable uncertainty across the energy industry—including the oil and gas, energy transition, power, and renewables spaces—arising from tariffs, various macroeconomic factors, and regulatory shifts, it is increasingly likely that oral representations based on current circumstances may prove hollow in the future. Accordingly, parties should be mindful of the limited recourse available for the "breach" of extra-contractual oral representations made in parallel to execution of written agreements.
The solution remains, as always, to get promises in writing. The Court's rejection in Roxo of claims based on extra contractual representations reemphasizes the importance of careful and precise contractual drafting. The inclusion or omission of terms such as conditions precedent, partnership disclaimers, merger clauses, and other representation provisions will govern whether claims based on oral representations are available later.
The preeminence of the express language used in a final agreement is especially salient in the context of mineral interest transfers and oil and gas leases that must satisfy the statute of frauds to be enforceable and in light of public policy favoring established land titles through written instruments in Texas. While Roxo focused on a lack of justifiable reliance to establish the necessary elements of a fraud claim, courts generally disfavor restraints on alienation of real property interests. Therefore, even if a covenant not to "flip" the lease to another operator had made it into the written document, it is unclear whether a court would enforce such a provision.
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