# Roxo Energy Co. v. Baxsto, LLC

Supreme Court of Texas, No. 23-0564

**Roxo Energy Co. v. Baxsto, LLC, No. 23-0564 (Tex. May 9, 2025). Holding: Baxsto's reliance on the alleged oral promises to drill rather than flip the lease and on Roxo's statements about the comparative bonus was unjustifiable as a matter of law, Roxo had no duty to disclose that it recorded the lease early, and Baxsto offered no evidence that Roxo intended its recordation promise to induce the later sale, so the trial court's summary judgment on all claims is reinstated.**

Practice areas: oil and gas, fraud

## Key issues

- A mineral owner cannot show justifiable reliance, as a matter of law, on a lessee's oral representations that it would drill rather than "flip" the lease, where the signed paid-up lease gives the lessee an unqualified right to assign it and imposes no drilling obligation.
- Fraud by nondisclosure fails without a duty to disclose, and arm's-length counterparties owe none, particularly about the contents of public deed records; a claim that a promise about recording the lease was a scheme to induce a later sale fails for lack of evidence of intent.

## Factual History
In October 2016, Baxsto, LLC began negotiating a lease of its mineral interests in Howard and Borden Counties with Todd Fitzgerald, CEO of Roxo Energy, which was partly funded by the private equity group Vortus (Opinion, PDF p. 2). Baxsto alleges that Fitzgerald said that if it signed quickly Roxo would give it the most favorable deal of any owner in the area, that Roxo was "not in the business of flipping mineral interests" and intended to drill, and that it planned to make its money "at the bit" (Opinion, PDF p. 2). The parties signed a "paid-up" oil and gas lease, a lease purchase agreement, and a lease memorandum, which provided that Roxo could record the lease only after paying a $5,000 per acre bonus; Roxo recorded the memorandum before paying, without telling Baxsto, and later at a meeting Vortus said it only invested in companies that drilled acreage (Opinion, PDF pp. 2-3). Roxo received two extensions of its purchase option, the first with a "most favored nations" clause, and Roxo disclosed that it was negotiating with another mineral owner, Navigator Oil and Gas; the parties then closed a sale of Baxsto's minerals on May 26, 2017, for $5,666,602.50 (Opinion, PDF p. 3). Roxo never drilled a well on the acreage and later sold the minerals to another operator, and Baxsto then learned that Navigator had been paid an $11,000 per acre bonus (Opinion, PDF pp. 3-4).

## Procedural History
Baxsto sued Vortus and Roxo for fraud, fraudulent inducement, statutory fraud, and fraud by nondisclosure, alleging that Roxo's representations were false and made to induce it to lock itself into an unproductive lease and later sell at a price below market value (Opinion, PDF p. 4). The trial court granted summary judgment for Roxo on all claims, and the court of appeals reversed, holding that the written agreements did not so directly contradict the alleged oral representations as to make reliance unjustifiable and that there were too few red flags to put Baxsto on notice (Opinion, PDF p. 4). Roxo petitioned for review on October 23, 2023, and Baxsto responded on February 1, 2024; the Court requested briefs on the merits on June 14, 2024, and Roxo filed its brief on August 14, 2024 (Docket). On May 9, 2025, the Court granted the petition and decided the case per curiam under Rule of Appellate Procedure 59.1, X.

## Issues Presented
Roxo presents whether the trial court's take-nothing judgment was correct because Baxsto could not have plausibly relied on alleged oral representations contradicted by the written agreements, and whether the court of appeals erred in holding that Baxsto could plausibly rely on them (Brief on the Merits (Roxo Energy Company, LLC, et al), PDF p. 11; Petition for Review (ROXO Energy Company, LLC, et al), PDF p. 8). Baxsto presents whether Roxo conclusively negated justifiable reliance by showing that all alleged misrepresentations and omissions were directly contradicted by the contracts, whether it negated the claim about Roxo's dealings with other lessors, and whether it established its other summary-judgment grounds (Response to Petition (Baxsto, LLC), PDF p. 4). The Court decided whether Baxsto's reliance was justifiable as a matter of law and whether the nondisclosure and recordation claims could survive (Opinion, PDF pp. 2, 4-5).

## Standard(s) of Review
Justifiable reliance is an element of each of Baxsto's fraud claims, and reliance on an oral representation directly contradicted by the express, unambiguous terms of a written agreement is not justified as a matter of law (Opinion, PDF pp. 4-5).

## Legal Arguments
**Whether Baxsto justifiably relied on Roxo's oral representations.**

**Petitioners (Roxo and Vortus):** The written agreements gave Roxo an unconditional right to assign the lease and an option, but not an obligation, to develop it, so Baxsto, a sophisticated lessor, could not plausibly have relied on oral promises that Roxo would drill rather than assign or on statements that it was getting the best price (Brief on the Merits (Roxo Energy Company, LLC, et al), PDF p. 11; Petition for Review (ROXO Energy Company, LLC, et al), PDF pp. 8, 10).

**Respondent (Baxsto):** Roxo did not conclusively negate justifiable reliance because there was no direct contradiction between its misrepresentations and the contract: Baxsto's claims arise from Roxo's misrepresentations about its intent to drill and its negotiations with another lessor and not from the fact that it assigned the lease, and the silence of a contract does not contradict misrepresentations made in negotiation (Response to Petition (Baxsto, LLC), PDF p. 14; Opinion, PDF p. 4).

## Stated Reasons the Court Should Take the Case
Roxo argued that the typical oil and gas lease is the most important instrument in the Texas oil and gas industry, that mineral owners and producers have relied for a century on the predictability and enforceability of its terms, and that allowing a lessor to avoid those terms by claiming it was misled by contradictory oral promises would undermine that reliance (Petition for Review (ROXO Energy Company, LLC, et al), PDF p. 10). In reply, Roxo said Baxsto's response did nothing to assuage the troubling effects of the court of appeals' decision on the oil and gas industry (Reply to Response to Petition filed (ROXO Energy, LLC., et al), PDF p. 4).

## Practice Area Tags
oil-and-gas, fraud

## Procedural Posture/Vehicle
Petition for review from the Eleventh Court of Appeals (Eastland) after a summary judgment; granted and decided per curiam without oral argument under Rule of Appellate Procedure 59.1 on May 9, 2025 (Opinion, PDF pp. 1, 4, 12).

## Amicus Involvement
- [Texas Oil & Gas Association](https://search.txcourts.gov/SearchMedia.aspx?MediaVersionID=edfc7d5b-a720-4b12-b82a-7af26e47ea55&coa=cossup&DT=BRIEFS&MediaID=a7a44bb3-ac59-4a78-a8ae-a51b0517f9f5) filed an amicus curiae brief on February 21, 2024, at the petition stage.

## Holding
Baxsto's reliance on the alleged oral promises to drill rather than flip the lease and on Roxo's statements about the comparative bonus was unjustifiable as a matter of law, Roxo had no duty to disclose that it recorded the lease early, and Baxsto offered no evidence that Roxo intended its recordation promise to induce the later sale, so the trial court's summary judgment on all claims is reinstated (Opinion, PDF pp. 2, 8-12).

## Court's Reasoning
**Justifiable reliance and contradiction.** A contract sufficiently contradicts an extra-contractual representation if a reasonable person could not read it and still plausibly claim to believe the representation, and the contract language need not explicitly contradict the representation or use the same terms, under *Barrow-Shaver* (Opinion, PDF p. 5).

**Drill rather than flip.** Baxsto's statements about Roxo's intent to develop effectively seek to bind Roxo to an oral promise to drill, but the lease contains no obligation to drill and includes a standard assignment clause allowing either party to transfer its interest, and an unqualified right to transfer contradicts an oral promise not to transfer, just as in *Barrow-Shaver* an unqualified right to withhold consent contradicted a promise to give it (Opinion, PDF pp. 6-7). Baxsto could have refused the transfer clause or demanded a drilling obligation in the habendum clause, and under a paid-up lease the lessee's right not to drill for a time had already been purchased, so these claims fail for lack of justifiable reliance (Opinion, PDF pp. 7-8).

**Bonus statements.** None of Roxo's alleged statements about its bonus offers to Navigator or the comparative bonus made it into the agreements, whose only related term was a six-month "most favored nations" clause that Baxsto does not claim was breached (Opinion, PDF pp. 8-9). The absence from the written agreements of language confirming the alleged representations is itself a red flag, and Baxsto's representative, who had negotiated at least fifty oil and gas leases in the prior two years and was handling an $8 million deal, should have appreciated the disparities even if Roxo was the more sophisticated party (Opinion, PDF pp. 9-10).

**Nondisclosure and recordation.** Fraud by nondisclosure requires a duty to disclose, which generally requires a confidential or fiduciary relationship, and as counterparties in a business deal Roxo owed none; the contents of deed records are public and give constructive notice, so Baxsto could have searched them (Opinion, PDF pp. 10-11). Baxsto's claim that Roxo's promise not to record until the bonus was paid was a fraudulent scheme to induce the sale failed because there was no evidence connecting the recordation promise to the sale, which occurred months later and which Roxo could not force Baxsto to make (Opinion, PDF pp. 11-12).

## Disposition
The Court granted the petition for review, reversed the court of appeals' judgment, and reinstated the trial court's judgment (Opinion, PDF p. 12).

## Vote Breakdown
Per curiam opinion (Opinion, PDF p. 1).


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Source: The SCOTX Report, https://scotxreport.com/cases/23-0564. AI-generated summary of the Court's opinion, orders and the parties' briefs, with pin cites to the page of each document; verify against the Court's own documents at search.txcourts.gov.