## Facts

- Preston and Chesapeake negotiated in 2008 for Chesapeake to purchase certain oil and gas leases owned by Preston.
- The parties executed three purchase and sale agreements (PSAs) on October 7–8, 2008, replacing an earlier letter of intent.
- The PSAs expressly referenced attached exhibits, including an exhibit identified as describing the oil and gas leases to be conveyed and another providing the assignment form for closing.
- The PSAs included mechanisms addressing title defects and purchase-price adjustments if some leases could not be conveyed as contemplated.
- Chesapeake refused to close; Preston sued for specific performance in the Southern District of Texas.
- Chesapeake asserted the PSAs were unenforceable under the Texas statute of frauds because the property description was inadequate, arguing the lease-listing exhibits were not “final.”
- After a bench trial limited to the statute-of-frauds issue, the district court entered judgment for Chesapeake, concluding the writings did not provide the means to identify the leases with reasonable certainty.
- Preston appealed on the statute-of-frauds ruling.

## Issues

1. Whether the PSAs, read together with their referenced exhibits, provided a legally sufficient description of the leases to satisfy the Texas statute of frauds.
2. Whether an alleged lack of “finality” of the exhibits prevented treating the exhibits as part of the signed writings for statute-of-frauds purposes.

## Decision

- The Fifth Circuit vacated the judgment for Chesapeake and remanded.
- The court held the district court erred by disregarding the exhibits based on their alleged lack of finality.
- Because the PSAs expressly incorporated the exhibits, the court treated the PSAs and exhibits as a single set of writings.
- The court concluded the exhibits contained sufficient identifying data to describe the leases with reasonable certainty under Texas law.
- As a result, the statute of frauds did not bar enforcement, and the PSAs could be specifically enforced subject to further proceedings on remand.

## Legal Principles

- Under Texas law, a contract for the sale of real property must contain a sufficient property description or provide the means or data to identify the property with reasonable certainty.
- Documents expressly incorporated by reference into a signed agreement may be read together to satisfy the statute of frauds.
- A property description may be sufficient if it provides a “nucleus of description” that allows identification by reference to objective information and existing records.
- The statute-of-frauds inquiry focuses on the content of the signed writings and incorporated materials; an asserted lack of “finality” in incorporated exhibits is not, by itself, a bar to considering them.

## Conclusion

The Fifth Circuit held that exhibits expressly incorporated into executed oil-and-gas PSAs could be considered in evaluating the statute of frauds and, because those exhibits adequately identified the leases, the district court’s contrary judgment was vacated and the case was remanded for further proceedings.


Preston Expl. Co., L.P. v. GSF, L.L.C., 669 F.3d 518 (5th Cir. 2012)