Annual Report

LLC 2018
2  AVOCA, L.L.C.
Description of Business
Avoca, L.L.C. owns and manages
approximately 16,000 acres comprising
virtually all of Avoca Island, which is
located about 90 miles west of New
Orleans in St. Mary Parish, Louisiana,
adjacent to and immediately southeast
of ­Morgan City. The island is rural and
substantially undeveloped except for
exploration and development of its oil
and gas resources.

Board of Managers and Officers

Bernard E. Boudreaux, Jr.,
Manager and Vice-President;
Attorney, Jones, Swanson, Huddell &
Garrison, L.L.C.
Charles Mark Duthu,
Manager and Secretary-Treasurer;
Executive Vice-President and
Manager, Trust and Asset
Management, Hancock Whitney Bank
Hardy B. Fowler, Manager
Director, Hancock Whitney Corporation
John P. (Jack) Laborde,
Manager and President;
President, Overboard Holdings,
L.L.C., President, All Aboard
Development Corporation,
Chairman, Gulf Island
Fabrication, Inc.
Edwin R. (Rod) Rodriguez, Jr.
President, Gustaf W. McIlhenny Foundation
Chairman of Board, National Fish and Wildlife Foundation

Corporate Office Code of Ethics

Avoca, L.L.C. corporate office is located
at:
228 St. Charles Avenue, Suite 1138
New Orleans, LA 70130
Telephone (504) 552-4720
Email: avoca838@aol.com
The Company has adopted a Code of
Ethics and operates pursuant to its
terms. A copy of the Code of Ethics
is available to a shareholder upon
­request.

AVOCA, L.L.C.   3

 Report to the Members
Issued Preliminary to the Eighty Seventh
Annual Meeting of Members on March 19, 2019
Dear Members,
 
I am pleased to report that the Company’s net income increased from a loss of $378,746
for 2017 to net income of $822,631 for 2018. This was due primarily to a $1,225,000 payment
received by the Company pursuant to an agreement which included the granting of a right-of-
way servitude. Further information regarding this transaction is contained in Footnote D of
the accompanying financial statements.

Total expenses for 2018 decreased $46,823 as compared to 2017 due primarily to decreases
in engineering fees and expenses and attorneys fees and expenses relating to three projects
affecting Avoca Island. Further information regarding expense activity and the three projects
can be found in the Management’s Discussion and Analysis of Financial Condition and Results
of Operations on page 15 of this Annual Report.

As reported in previous Annual Reports, the Company has been actively working toward the
establishment of a bottomland hardwood forest and cypress swamp coastal and non-coastal
wetland mitigation bank on Avoca Island. The approval of a wetland mitigation bank is fully
regulated by the U.S. Army Corps of Engineers (USACE) and is, and has been, a lengthy and
detailed process. The Prospectus outlining the details of the mitigation bank was submitted to
the USACE and other regulatory agencies. In the latter part of 2018 the Company received its
Initial Evaluation Letter from the USACE which recognized the suitability of the Avoca Island
Mitigation Bank to sell credits for losses to aquatic resources authorized by Section 404 and
Coastal Use Permits. The Company is currently in the process of preparing the draft
Mitigation Banking Instrument (MBI) which contains detailed information pertaining to the
ecological features of the mitigation bank, credit values, financial assurance mechanisms, as
well as management and maintenance plans. Once completed, the draft MBI will be submitted
to the USACE and other regulatory agencies for additional review and comments which are
then incorporated into a final MBI.

In light of the net losses in 2016 and 2017 and the anticipated cash requirements to establish
the mitigation bank, the Company made the difficult decision once again not to declare an
annual dividend. We continue to be encouraged, however, with the potential of wetlands
mitigation banking and the impact it may have on the Company as a new source of revenue.

We welcome back Mr. Edwin R. (Rod) Rodriguez, Jr. to the Board of Managers who is com-
pleting the term of Mr. Edward G. Francis who resigned from the board to pursue other
opportunities out of state. Mr. Rodriguez previously served on the Board and we are pleased
to have his professional experience to put to good use on the Company’s behalf.

We appreciate your continued interest in Avoca, L.L.C.

Sincerely,

John P. (Jack) Laborde

President
New Orleans, Louisiana
January 25, 2019

4  AVOCA, L.L.C.
 Independent Auditors’ Report
To the Board of Managers and
Members of Avoca, L.L.C.
New Orleans, Louisiana

Report on the Financial Statements

We have audited the accompanying financial statements of Avoca, L.L.C. (A Louisiana limited
liability company), which comprise the balance sheets as of December 31, 2018 and 2017, and the
related statements of income, statements of changes in members’ equity, cash flows and compre-
hensive income for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.

Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audit to obtain reasonable assur-
ance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditors’ judgment,
including the assessment of the risks of material misstatement of the financial statements, wheth-
er due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reason-
ableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of Avoca, L.L.C. as of December 31, 2018 and 2017, and the results of its
operations, retained earnings, cash flows and comprehensive income for the years then ended in
accordance with accounting principles generally accepted in the United States of America.

Respectfully submitted,

(A Professional Corporation)

New Orleans, Louisiana

January 18, 2019

AVOCA, L.L.C.  5
Balance Sheets

Years Ended December 31

2018 2017

ASSETS

CURRENT ASSETS
Cash and cash equivalents $   445,517 $    608,961
Short-term investments in debt securities 755,942 995,303
Accounts receivable 11,410 -
Accrued interest receivable 36,379 37,239
Prepaid expenses 22,322 21,833
TOTAL CURRENT ASSETS 1,271,570 1,663,336

PROPERTY AND EQUIPMENT

Less accumulated depreciation and depletion 33,184 40,835

OTHER ASSETS
Long-term investments in debt securities 3,349,750 3,174,847
Long-term investments in equity securities 2,681,097 2,052,885
Deferred tax asset 79,117 124,614
Avoca Drainage Bonds, $415,000, in default —
at nominal amount 1 1
TOTAL OTHER ASSETS 6,109,965 5,352,347

$  7,414,719 $ 7,056,518

6  AVOCA, L.L.C.
 Years Ended December 31
2018 2017

LIABILITIES AND MEMBERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses $     48,804 $      74,550
Income taxes payable 2,514 -
TOTAL CURRENT LIABILITIES 51,318 74,550

COMMITMENTS - -

MEMBERS’ EQUITY
Membership units, no par value—8,305 units
  authorized, 8,058 issued and outstanding 94,483  94,483
Retained earnings    7,367,131 6,544,500 
Accumulated other comprehensive
  income (loss), net of deferred taxes
     2018 - ($26,108); 2017 - $91,173 (98,213) 342,985
TOTAL MEMBERS’ EQUITY  7,363,401 6,981,968

$  7,414,719 $ 7,056,518

See accompanying notes.

AVOCA, L.L.C.  7
Statements of Income (Loss)

Years Ended December 31

2018 2017

Revenue:
Royalties $  118,398 $ 121,981
Less severance taxes 4,375 3,470
114,023 118,511

Interest and dividend income 121,482 100,345

Realized gains on securities 202,196 103,143
Rental income 46,664 41,323 
Other 30,446 22,118
Agreement proceeds (Note D) 1,225,000 -
1,739,811 385,440

Expenses:
Attorneys fees and expenses 68,203 76,226
Auditing fees 25,557 23,729
Board of Managers fees 58,750 50,000
Bookkeeping and clerical services 30,750 29,750
Engineering fees and expenses 255,977 337,658
Insurance 61,054 58,986
Investment management fees 33,556 31,343
Management fees 72,500 91,625
Office and miscellaneous expenses 21,245 20,753
Member servicing expenses 24,328 24,177
Surface management expenses 64,809 18,740
Taxes, other than income taxes 35,160 35,725
751,889 798,712

INCOME (LOSS) BEFORE INCOME TAXES 987,922 (413,272)

Income taxes (benefit) 165,291 (34,526)

NET INCOME (LOSS) $ 822,631 $  (378,746)   

Earnings (loss) per unit $   102.09 $   (47.00) 

Dividends per unit -     -  

See accompanying notes.

8  AVOCA, L.L.C
Statements of Changes in Members’ Equity
Accumulated
Membership Comprehensive Retained
Units Income(Loss) Earnings Total

Balance, December 31, 2016 $    94,483 $   151,715 $ 6,923,246 $ 7,169,444

Net loss for the year - - (378,746) (378,746)

Other comprehensive income (loss):
Net change in unrealized gain (loss)
on securites available for sale
net of deferred taxes $52,783 - 261,408 - 261,408

Reclassification adjustment,
net of deferred taxes ($33,005) - (70,138) - (70,138)
Total comprehensive income (loss) - 191,270 (378,746) (187,476)

Balance, December 31, 2017 94,483 342,985 6,544,500 6,981,968

Net income for the year - - 822,631 822,631

Other comprehensive income (loss):
Net change in unrealized gain (loss)
on securites available for sale
net of deferred taxes ($74,819) - (281,464) - (281,464)

Reclassification adjustment,
net of deferred taxes ($42,462) - (159,734) - (159,734)
Total comprehensive income (loss) - (441,198) 822,631 381,433

Balance, December 31, 2018 $ 94,483 $ (98,213) $7,367,131 $ 7,363,401

Statements of Comprehensive Income (Loss)

Years Ended December 31 
2018 2017

Net income (loss)     $ 822,631 $     (378,746)

Other comprehensive income (loss):
  Net change in unrealized gain on
  securities available for sale,
  net of deferred taxes
  2018 - ($ 74,819); 2017 - $52,783 (281,464) 261,408

  Reclassification adjustment,  
  net of deferred taxes
  2018 - ($42,462); 2017 - ($33,005) (159,734) (70,138)

COMPREHENSIVE INCOME (LOSS) $  381,433 $  (187,476)

See accompanying notes.

AVOCA, L.L.C.  9
Statements of Cash Flows

Years Ended December 31

2018 2017

OPERATING ACTIVITIES
Net income (loss) $  822,631 (378,746)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation expense 7,651 7,651
Realized gains on securities (202,196) (103,143)
Deferred taxes 162,778 (34,526)
Decrease in investments due to
amortization of premiums and discounts (10,410) (28,586)
Changes in operating assets and liabilities:
Accounts receivable (11,410) 11,500
Accrued interest receivable 860 (2,007)
Prepaid expenses (489) 635
Accounts payable and accrued expenses (25,746) (29,649)
Income taxes 2,514 54,578
NET CASH PROVIDED BY (USED IN)
      OPERATING ACTIVITIES 746,183 (502,293)

INVESTING ACTIVITIES
Purchase of investments in debt securities (1,100,378) (1,102,442)
Maturity of investments in debt securities 1,175,246 1,392,427 
Purchase of investments in equity securities (2,654,636) (868,139)
Proceeds from sale of equity securities 1,670,141 1,172,121

    NET CASH PROVIDED BY (USED IN)

INVESTING ACTIVITIES (909,627) 593,967


INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (163,444) 91,674

Cash and cash equivalents at beginning of year 608,961 517,287

      CASH AND CASH EQUIVALENTS
AT END OF YEAR $  445,517 $   608,961

See accompanying notes.

10  AVOCA, L.L.C.
 Notes to Financial Statements
December 31, 2018 and 2017
NOTE A—Significant Accounting Policies
General: Avoca, L.L.C. (the Company) owns
and leases land, located in St. Mary Parish,
Louisiana, to unaffiliated parties for oil and
gas exploration. Income in the accompanying
financial statements includes royalties
received from oil and gas production related
to these leases in addition to gains and losses
on equity securities, interest and dividend
income and the leasing of hunting rights.
Corporate Action: On December 16, 2015
the shareholders adopted a Plan of Entity
Conversion whereby Avoca, Incorporated,
a Louisiana corporation, was converted to
Avoca, L.L.C., a Louisiana limited liability
company. Avoca, L.L.C. is the surviving entity.
Each share of common stock of the former
Corporation was converted into one unit of
membership of the LLC. The duration of
the Company is perpetual. The personal
liability of its members for monetary damages
is limited to the fullest extent allowed by
Louisiana law.
Cash Equivalents: Cash equivalents consist
of investments with a maturity of three
months or less from date of purchase.
The Company periodically maintains cash
balances at a financial institution that exceed
federally insured amounts.
Investments: The Company has evaluated
its investment policies consistent with
Financial Accounting Standards Board
(FASB) Accounting Standards Codification
(ASC) No. 320 “Investments in Debt and
Equity Securities” and determined that its
investments in equity securities are to be
classified as available-for-sale. Available-for-
sale securities are carried at fair value based
on quoted market prices of the investment at
December 31, 2018 and 2017. Net realized
gains or losses on equity securities are
included in net earnings. Unrealized gains
or losses are recognized as a component
of other comprehensive income and as a
separate component of equity. For purposes
of determining realized gains and losses,
the cost of the security sold was based on
specific identification. The fair value of the
investments in equity securities at December
31, 2018 and 2017 were $2,681,097 and
$2,052,885, respectively. Unrealized losses
at December 31, 2018 were $124,321 and
unrealized gains at December 31, 2017 were
$434,158.
Short-term investments in debt securities
consist of municipal bonds with original
maturities of greater than three months but
with maturity dates within one year from the
balance sheet date.
Long-term investments in debt securities
consist of corporate and municipal bonds with
maturities in 2020 through 2027.
Management determines the appropriate
classification of debt securities at the time of
purchase. Debt securities are classified as
held-to-maturity when the Company has the
positive intent and ability to hold the securities
to maturity. Held-to-maturity securities are
stated at amortized cost including accrued
interest. At December 31, 2018 and 2017,
all short-term investments and long-term
investments were classified as held-to-
maturity. Debt securities whose decline in
fair value is determined to be permanent are
written down to fair value. The fair value of the
investments in debt securities approximated
the carrying value at December 31, 2018
and 2017.
Proceeds from sales and maturities of
securities for the years ended December
31, 2018 and 2017 were $2,845,387 and
$2,564,548, respectively.
Property and Equipment: Land is carried
at cost less amounts received for the sale
Investment income (loss) for the years ended December 31, 2018 and 2017 consisted of the following:
Interest and dividend income
Realized gains on sale of securities 202,196 103,143
Unrealized gains (losses) on securities
     Total
of rights-of-way and similar servitudes. Land
improvements and building are carried at cost
and depreciated over their estimated useful lives
of 15 to 30 years. Equipment is carried at cost
and depreciated over estimated useful lives of
3 to 5 years.
Income Taxes: The Company accounts for
income taxes in accordance with Financial
Accounting Standar ds Boar d (FASB)
Accounting Standards Codification (ASC) No.
740 “Income Taxes.” Income taxes include
deferred taxes resulting primarily from federal
net operating loss carryforwards and temporary
differences due to differences in amortization
periods of intangible assets, basis amounts and
depreciation periods of property and equipment
for financial reporting purposes and income tax
purposes, including writing off the cost of assets
under IRC Section 179 and special depreciation
for Go Zone property in the year acquired.
Use of Estimates: The preparation of financial
statements in conformity with accounting
principles generally accepted in the United
States of America requires management to
make estimates and assumptions that affect the
amounts reported in the financial statements
and accompanying notes. Actual results could
differ from those estimates.
Fair value of Financial Instruments: The
fair value of the Company’s financial assets
and liabilities, other than available-for-sale
marketable securities, approximates book value
at December 31, 2018 and 2017.
Subsequent Events: We evaluated events
occurring between the end of our year,
December 31, 2018 and January 18, 2019, when
the fiscal statements were issued.
Continued on next page
2018 2017 
$  121,482 $  100,345
(558,479) 211,048
$ (234,801) $ 414,536
AVOCA, L.L.C.  11
Notes to Financial
Statements (Continued)
NOTE B—Income Taxes
The deferred tax asset of $79,117 at December
The components of income tax expense (benefit) for the years ended December 31 are as follows: 31, 2018 relates to a federal net operating loss
2018   2017   carryforward, a difference in the accounting and
income tax amortization periods of intangible
Current: assets, and the net change in unrealized loss
Federal $ (11,002) $ - on equity securities available for sale (deferred
State 13,516 - tax asset of $83,214) and a difference between
the accounting and income tax basis and
TOTAL CURRENT   2,514 - depreciation periods of property and equipment
Deferred: (deferred tax liability of $4,097).
Federal 161,243 (34,526)
The deferred tax asset of $124,614 at December
State 1,534 -
31, 2017 relates to a federal net operating
TOTAL DEFERRED   162,777 (34,526) loss carr yfor ward and a difference in the
accounting and income tax amor tization
$ 165,291 $(34,526) periods of intangible assets (deferred tax
asset of $220,634) and a difference between
the accounting and income tax basis and
The 2017 Tax Cuts and Jobs Act reduction in the corporate maximum income tax rate depreciation periods of property and equipment
from 35% to 21% resulted in the Company realizing a reduction to its deferred tax asset of and the net change in unrealized gain on equity
securities available for sale (deferred tax liability
$134,669 at December 31, 2017. of $96,020).
The Company made no income tax payments in 2018 or 2017.

The reconciliations between the federal statutory income tax rate and the Company’s effective income tax rate for the years ended
December 31 are as follows:
2018  2017  
Amount      Rate Amount   Rate

Tax expense based on federal statutory rate $     207,464 21.0 % (140,512) (34.0)%
Adjustment for change in deferred tax rate - - 134,669 32.6 %
Statutory percentage depletion (18,960) (1.9)% - -
Municipal bond interest (11,234) (1.1)% (21,176) (5.1)%
Dividend received deduction (4,924) (0.5)% (8,150) (2.0)%
State income taxes
(net of federal Income tax deduction) (2,838) (0.3)% - -
Other (4,217) (0.4)% 643 .1 %

                 INCOME TAXES $165,291 16.8% $ (34,526) (8.4)%

On the basis of the federal tax returns filed through December 31, 2018 the Company has the following carry forwards:

Net operating loss  

Expires year ended Dec 31 Federal    Louisiana
2036 $ - $ 263,132
2037 266,479 509,389
TOTAL $ 266,479 $ 772,521

Management has reviewed the tax positions taken in filings with the authorities and believes that there would be no resulting adjustment to taxes
paid should these positions be examined. Tax years subject to tax authority review were December 31, 2015 and 2016 and 2017.

12  AVOCA, L.L.C.

NOTE C—Major Customers
________________________________
The net royalties received from one inde-
pendent oil and gas exploration company
accounted for 100% of total net royalties
recorded for the years ended December 31,
2018 and 2017.
NOTE D—Major Transaction
________________________________
Effective March 28, 2018, the Company ex-
ecuted an agreement with a regional power
company which included the granting of
a right-of-way servitude across Company
property for the purpose of constructing a
power transmission line. The agreement
called for a payment of $1,225,000 to Avoca,
L.L.C. which payment included compensa-
tion for the right-of-way servitude, wetland
banking forbearance, and land restoration.
$1,000,000 of the $1,225,000 is refund-
able by the Company based upon certain
conditions relating to the construction and
completion of the transmission line.
The Company has evaluated the terms of
the agreement consistent with Financial
Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) No.
606 “Revenue from Contracts with Customers”
and determined that it is probable that a
significant reversal in the amount of revenue
recognized will not occur and, therefore,
has recognized the full transaction price of
$1,225,000 as income in the accompanying
financial statements.
NOTE E—Oil and Gas Quantities Produced
and Average Sales Prices (unaudited)
________________________________
The following table reflects the Company’s
share of the oil and gas volumes produced and
average sales prices from leases held under
production for the years ended December 31,
2018 and 2017
  Oil     Gas
(BBLs)   (MCFs)
Production
2018 474 28,907
2017 546 30,193
Average Sales Prices
2018 $ 69.75 $  2.95
2017 $ 50.89 $ 3.12
NOTE F – Related Party Transactions
__________________________
The following table summarizes transac-
tions with the Hancock Whitney Bank, a
major unitholder of the Company, for the
Notes to Financial
Statements (Continued)
years ended December 31, 2018 and 2017.
Office Investment
Rent Management
Paid Fees Paid
2018 $8,184     $33,556
2017 $8,184    $31,343 cation (ASC) No. 810. The rent for the entire
NOTE G—Commitments
__________________________
On December 13, 2006 the Board of Direc-
tors of the Company approved retaining
$1,500,000 from 2006 net income to be
used to develop and fund a plan of erosion
abatement and control including a levee
repair program. As of December 31, 2018,
approximately $56,000 has been spent on
hydrographic and topographic surveys nec-
essary to develop the engineering design
and related cost estimates for the program
and approximately $56,000 was spent on
remedial repair to an eroding breach on
Company property.
After reviewing the results of the concep-
tual design plan and related cost estimates
presented by the Company’s engineers, the
Board concluded that immediate repairs
were not warranted and the unexpended
funds would continue to be held in reserve
for future levee erosion control when
needed.
The Company has a lease with the Avoca
Duck Club (the Club), an unrelated entity,
to allow the members of the Club use of the
Company’s land for the purpose of hunting
wild game and birds, and for noncom-
mercial fishing. The term of the lease
commenced June 1, 1994 for a period of ten
years with the Club having two ten-year op-
tions to extend the lease. In 2003, the Club
exercised the first ten-year option to extend
the lease to June 1, 2014 and in March 2014
exercised the second ten-year option to
extend the lease to June 1, 2024.
If the Company elects to exercise its
unrestricted, unconditional and absolutely
discretionary right to terminate the lease
before the end of its term, the Company
must reimburse the Club for its undepre-
ciated cost of the building (excluding the
Company’s cash contribution), based on
straight-line depreciation over 30 years. Un-
der the lease, the Club’s undepreciated cost
of the building will be reduced over time to
an ultimate reimbursable amount not less
than $80,000.
During 2009, the Company, as Lessee, entered
into a ninety-nine year lease for acreage on
Avoca Island adjacent to its property with an
entity which is a Variable Interest Entity (VIE)
as defined in Financial Accounting Standards
Board (FASB) Accounting Standards Codifi-
ninety-nine year term shall be the money
paid by the Company to file and prosecute a
partition by licitation with the intent that the
Lessor, a limited liability company formed by
two owners of the acreage, will acquire by
purchase or contribution additional interests
in acreage not now owned by the Lessor. The
VIE is managed by the Company. The suit
for partition by licitation, prosecuted by the
VIE, was dismissed by the court in 2013. The
Company continues to act as manager of the
VIE and still continues its position as Lessee
from the VIE on the acreage adjacent to the
Company’s property. The VIE has not been
consolidated because it would have no effect
on the reported results of operations and
equity of the Company, nor does the Company
own an equity interest in the VIE.
NOTE H—Fair Value Measurements
__________________________
ASC Section 820, Fair Value Measurements
and Disclosures, issued by the FASB, estab-
lishes a framework of measuring fair value.
That framework provides a fair value hier-
archy that prioritizes the inputs to valuation
techniques used to measure fair value. The hi-
erarchy gives the highest priority to unadjust-
ed quoted prices in active markets for identical
assets or liabilities (Level 1 measurements)
and the lowest priority to unobservable inputs
(Level 3 measurements). The three levels of
the fair value hierarchy under ASC Section 820
are described below:
Level 1 - Inputs to the valuation methodology
are unadjusted quoted prices for identical
assets or liabilities in active markets that the
Company has the ability to access.
Level 2 - Inputs to the valuation methodology
include: (1) quoted market prices for similar
assets or liabilities in active markets; (2)
quoted prices for identical or similar assets
or liabilities in inactive markets; (3) inputs
other than quoted prices that are observable
for the asset or liability; and (4) inputs that
are derived principally from or corroborated
by observable market data by correlation or
other means. If the asset or liability has a
specified (contractual) term, the Level 2 input
must be observable for substantially the full
Continued on next page
AVOCA, L.L.C.  13
Notes to Financial Statements (Continued)
term of the asset or liability.
Level 3 - Inputs to the valuation methodol-
ogy are unobservable and significant to the
fair value measurement.
The asset’s or liability’s fair value measure-
ment level within the fair value hierarchy
is based on the lowest level of any input
that is significant to the fair value measure-
ment. Valuation techniques used need to
maximize the use of observable inputs and
minimize the use of unobservable inputs.
The following is a description of the
valuation methodologies used for assets
measured at fair value. There have been
no changes in the methodologies used at
December 31, 2018 and 2017:
Corporate Equities:
Valued at the closing price reported on
the active market on which the individual
securities are traded.
Debt Securities: methods are appropriate and consistent
Valued at amortized cost including ac- with other markets participants, the use of
crued interest, which approximates market different methodologies or assumptions to
value. In the event of a permanent decline determine the fair value of certain financial
in value securities are written down to fair instruments could result in a different fair
value. value measurement at the reporting date.
The methods described above may produce The following table sets forth by level, within
a fair value calculation that may not be the fair value hierarchy, the assets and liabili-
indicative of net realizable value or reflec- ties of the Company for which fair values are
tive of future fair values. Furthermore, determined on a recurring basis:
while the Company believes its valuation
Investment Assets at Fair Value
December 31, 2018 Level 1 Level 2 Level 3 Total
Equity securities $ 2,681,097 $     — $     — $2,681,097
Debt securities — 4,105,692  — 4,105,692
$2,681,097 $ 4,105,692 $      — $ 6,786,789
December 31, 2017 Level 1 Level 2 Level 3 Total
Equity securities $ 2,052,885 $      — $      — $ 2,052,885
Debt securities — 4,170,150  — 4,170,150
$ 2,052,885 $4,170,150 $  — $6,223,035

Management’s Discussion and Analysis of

Financial Condition and Results of Operations
Liquidity and Capital Resources
The Company’s continued liquidity is
evidenced by the fact that 16% of its assets, as
measured by book value, are cash and cash
equivalents and short-term investments in
debt securities. Current liabilities at year-end
were $51,318. The Company’s business is
largely passive and consequently all capital
requirements for exploration, development
and production of the Company’s mineral
resources are funded by its lessees. The
continued development of the wetlands
mitigation land bank (discussed further
below) will require cash outflows estimated
at $204,000 in the year 2019. Current financial
resources and anticipated net income are
expected to be adequate to meet cash
requirements in the year ahead.
2018 as compared to 2017
Avoca, L.L.C. owns lands in St. Mary
Parish, Louisiana under which hydrocarbons
are located. The hydrocarbons are developed
in accordance with the custom of the trade in
the oil and gas industry in Louisiana, which
development is conducted with risks and
uncertainties usually associated with the
production and marketing of hydrocarbons.
Total revenue for 2018 increased $1,354,371
due primarily to a $1,225,000 payment
14  AVOCA, L.L.C.
received by the Company pursuant to an
agreement which included the granting of a
right-of-way servitude. Further information
regarding this transaction is contained in
Footnote D of the financial statements.
Revenues from royalty income net of
severance taxes decreased from $118,511 in
2017 to $114,023 in 2018 or approximately 4%.
The reduction of revenue from royalties was
due to a decrease in production volumes from
the Company’s producing wells combined
with a decrease in the average sales price
of natural gas. The Company’s share of
natural gas production volumes in 2018
decreased approximately 16% as compared to
2017. The average sales price of natural gas
decreased approximately 5% as compared to
2017. Revenue from natural gas production
contributed 75% of net royalty income for
2018 as compared to 80% in 2017.
Correspondingly, the Company’s share
of condensate production volumes in 2018
decreased approximately 7% as compared to
2017. The average sales price of condensate
increased approximately 37% as compared to
2017. Revenue from condensate production
contributed 25% of net royalty income for
2018 as compared to 20% for 2017. Further
information regarding production volumes
and average sales prices is contained in
Footnote E of the financial statements.
The Company’s principal producing wells
are located in the Ramos Field. Production
from the four Ramos Field, LLC (formerly Alta
Mesa Services LP) wells was responsible for
100% of the total net royalties for 2018 and 2017.
The C.M. Thibodaux No. 1 and C.M. Thibodaux
No. 3 wells were shut in during 2018 and the
new operator has informed the Company that
it is reviewing future options with respect to
the wells. There were no royalty payments
received from the Delta Operating Corporation
Avoca No. 1 well in 2018 or 2017. The well’s
operator has advised the Company that it is still
flowing the well to reduce the column of water
in the tubing in order to restore commercial
production. Additional information on each
producing well is contained in the Table of
Production Information on page 15. There were
no new oil, gas and mineral leases granted by
the Company in 2018 or 2017, nor were any new
wells affecting Avoca, L.L.C. drilled in 2018 or
2017.
Interest and dividend income on investments
increased $21,137 or approximately 21% due
to an increase in the average balance of funds
invested combined with an increase in dividend
income received.
During 2018 the Company realized a total
of $202,196 in gains before income taxes from
the sale of securities as compared to a total of
$103,143 from that source in 2017.
The Company’s investment in available-for-
sale equity securities incurred unrealized losses
Continued on next page
Management’s Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
in market value of $441,198 net of deferred
taxes of $117,281 at December 31, 2018 as
compared to unrealized gains in market
value of $191,270 net of deferred taxes of
$19,778 at December 31, 2017. These gains
and losses are reported as Accumulated
Other Comprehensive Income in the equity
section of the Balance Sheets as required by
generally accepted accounting principles.
Other income, which consisted of revenue
from the Company’s share of sales of alligator
hides and alligator eggs, increased from
$22,118 in 2017 to $30,446 or approximately
38%. This was due primarily to increased
prices associated with the harvest of eggs.
Total expenses for 2018 decreased $46,823
as compared to 2017 or approximately
6% due principally to decreases totaling
$89,704 in attorney fees and expenses and
engineering fees and expenses ; both expense
categories relating to three projects affecting
Avoca Island described further below. Also
contributing to the decrease in expenses was
a $19,125 decrease in management fees due
to the retirement of the Company’s surface
manager. The decrease in total expenses
would have been greater but for the $46,069
increase in surface management expenses
due to the implementation of a feral hog
control program and an increase in surface
maintenance during 2018.
The first project that the Company has
been working on, as reported in previous
Annual Reports, is the establishment of a
bottomland hardwood forest and cypress
swamp coastal and non-coastal wetland
mitigation bank on Avoca Island. The
Prospectus outlining the details of the
mitigation bank was submitted to the U.S.
Army Corps of Engineers (USACE) and
other regulator y agencies. In the latter
part of 2018 the Company received its Initial
Evaluation Letter from the USACE which
recognized the suitability of the Avoca Island
Mitigation Bank to sell credits for losses to
aquatic resources authorized by Section 404
and Coastal Use Permits. The Company is
currently in the process of preparing the draft
Mitigation Banking Instrument (MBI) which
contains detailed information pertaining
to the ecological features of the mitigation
bank, credit values, financial assurance
mechanisms, as well as management and
maintenance plans. Once completed, the
draft MBI will be submitted to the USACE
and other regulatory agencies for additional
review and comments which are then
incorporated into a final MBI. The Company
incurred engineering expenses relative to this
project of $86,002 and $162,152 in 2018 and
2017, respectively.
The second project concerns a proposed
flood control project of the St. Mary Parish
Levee District (SMLD) on, and adjacent
to, Avoca Island. We believe that the
preliminar y geological and engineering
studies have indicated that the flood control
project, as proposed by SMLD, would have
extreme consequences negatively impacting
thousands of acres of Avoca Island. The
Company retained special environmental legal
counsel to protect the interest of the Company
and its property and formally object to the
grant of a permit to SMLD by the Louisiana
Department of Natural Resources (DNR).
After filing and pursuing our objection, the
Louisiana Department of Natural Resources’
granting of the permit to SMLD has now
been ratified. The Board of Managers has
determined that it is in the best interest of
the Company not to pursue this matter further
at this time. The Company incurred attorney’s
fees and expenses of $18,568 in 2017.
The third project concerns the granting
of a new right-of-way servitude across Avoca
Island. As further reported in footnote D to the
financial statements, the Company completed
negotiations with a regional power company and
executed an agreement in 2018 which included
the granting of a right-of-way ser vitude.
Performing due diligence on this agreement
necessitated an evaluation of its potential
impact on the hydrology of the island and the
mitigation requirements for such a project.
The Company incurred engineering fees and
expenses relative to this project of $42,615 and
$171,419 in 2018 and 2017 respectively.
Income taxes for 2018 were $165,291 as
compared to an income tax benefit of $34,526
for 2017 due primarily to the carry forward of a
federal net operating loss to future periods. The
income tax benefit for 2017 would have been
greater but for the $134,669 one-time charge
against earnings resulting from the decrease
in the deferred tax effective rate applied to
the deferred tax asset at December 31, 2017
as a result of the passage of the tax reform bill
signed into law on December 22, 2017.
Net income was $102.09 per membership
unit in 2018 as compared to a net loss of $47.00
per unit in 2017. The Company did not declare
a dividend in 2018 or 2017. Future dividends
will be largely dependent on the sale of land
bank mitigation credits.
Fur ther infor mation regarding the
Company’s financial condition and results
of operations is contained in the President’s
message on page 4.

Table of Production Information

The following table provides production information on the principal producing wells for 2018 and 2017 .
Royalty Income (Decrease)
                      Net Revenue Net of Severance Taxes in Natural Gas
Operator/Well                 
Interest 2018     2017 Production

Alta Mesa Services, LP:

  Avoca No. 47-1 12.93% $ 72,810 $ 70,378   8% 
  C.M. Thibodaux No. 1 2.71% $ 4,963 $ 5,237 (4%)
  C.M. Thibodaux No. 3  2.71% $ 3,801 $ 4,946    (29%)     
  C.M. Thibodaux No. 4 2.71% $ 32,449 $ 37,950 (28 %)

Transfer Agent
American Stock Transfer Membership unit holders address changes or questions about membership units
& Trust Company, LLC or dividend payments should be directed to the transfer agent at:
6201 15th Avenue (800) 937-5449
Brooklyn, NY 11219 E-mail: help@astfinancial.com
www.astfinancial.com
AVOCA, L.L.C.  15
AS OF
AS OF DECEMBER
DECEMBER 31,
31,2018
2017