EXHIBIT 13

















          AVOCA                                 Annual Report
      INCORPORATED                              --------------------------------
                                                1996





<PAGE>



                            [Blank page appears here]


<PAGE>



Description of Business

         Avoca,   Incorporated  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 virtually  undeveloped  except
for exploration and development of its oil and gas resources.

         Avoca,  Incorporated is largely a passive royalty company which derives
most of its income from  royalties,  bonuses and delay rentals under oil and gas
leases covering its Avoca Island acreage.

Directors and Officers

Richard W. Fox, Director;                   Guy C. Lyman, Jr., Director;
Investor, formerly Manager,                 Attorney, Milling, Benson, Woodward,
Sandy Run Farm L.L.C.;                      Hillyer, Pierson & Miller, L.L.P.
prior thereto Vice President, FirstNBC
(Trust Investment Department)               M. Cleland Powell, III,
                                            Director and Secretary-Treasurer;
Edward B. Grimball,                         Senior Vice President,
Director and President;                     Whitney National Bank
Chief Financial Officer and
Executive Vice President,
Whitney National Bank

Peter V. Guarisco, Director;
Chairman, Hellenic, Inc.





















                                                 [Picture of boat appears here.]

                                                           AVOCA, Incorporated 3

<PAGE>



Report to the Shareholders

Issued Preliminary to the Sixty-Fifth
Annual Meeting of Shareholders on March 18, 1997

Dear Shareholders:
         During 1996 net royalties from oil and gas production increased 125% to
$229,049.   Income  increased  to  $423,651  in  1996  from  $87,356  before  an
extraordinary  item ($69,613 net of income taxes)  related to the  settlement of
the Company's  lawsuit against Gibson Roofers,  Inc. in 1995.  Three new seismic
permits,  which reflect the Company's  continuing efforts to fully develop Avoca
Island's  mineral  resources  and are  discussed on Page 14 of this report,  are
primarily  responsible for the increase.  Annual per share earnings were $.51 in
1996  compared  to $.11  before  the  extraordinary  item  and  $.19  after  the
extraordinary  item in 1995.  Dividends per share increased to $.45 from $.15 in
1995 in line with the Company's increased income.
         Production from the Intercoastal  Shipyard No. 2 in the Ramos Field was
reported at  approximately  25,473  barrels of condensate  and 883,498  thousand
cubic feet (Mcf) of gas in 1996. A successful  workover by its  operator,  Black
Gold Production  Company,  Inc., restored production to this well early in 1996.
According to the operator, the current wellhead flowing pressure is 4,444 pounds
per square inch gauge (psig) and the well  produces  water at a fairly  constant
rate of 350 barrels per day. The average 1996 sales prices from the Intercoastal
Shipyard  No. 2 well  were  approximately  $2.82 per Mcf of gas and  $22.17  per
barrel of condensate. The well, which produces from the Ramos Field, B Sand Unit
B under the Capital Energy, Inc. Lease dated January 2, 1996,  accounted for 44%
of the Company's royalty income in 1996.
         Production  from the Delta  Operating  Corporation  (formerly  Alliance
Operating  Company) Avoca No. 1 well,  also in the Ramos Field,  was reported at
approximately  3,787  barrels of  condensate  and  238,455 Mcf of gas in 1996 as
compared to 4,158 barrels of condensate  and 259,513 Mcf of gas in 1995. The No.
1 well  reportedly  continues  to produce  water,  as it has from  inception  of
production,  at a fairly  constant  rate of  approximately  400 barrels per day.
According to the operator of the well, the current  wellhead flowing pressure is
3,475 psig as  compared to 3,175 psig in December  of 1995.  In  September,  the
operator  chemically treated the well to clean the producing  formation near the
wellbore in order to improve the well's performance, and has advised the Company
that the treatment was successful.  The average 1996 sales prices from the Delta
No. 1 Avoca well were  approximately  $2.79 per Mcf of gas and $21.15 per barrel
of  condensate  as  compared  to $1.73 per Mcf of gas and  $18.00  per barrel of
condensate in 1995.
         Although  no new wells were  drilled on Avoca  Island,  two new mineral
leases  covering a total of 465 acres were  granted  in 1996.  Also,  two of the
above  mentioned  seismic  permits  include  mineral  lease options which in the
aggregate  cover almost all of the island.  A complete list of mineral leases is
found on the back cover of this annual report.

                                                         Respectfully submitted,

                                                         /s/ Edward B. Grimball

                                                         Edward B. Grimball
                                                         President
February 7, 1997

4     AVOCA, Incorporated

<PAGE>



Report of Ernst & Young LLP,
Independent Auditors


The Board of Directors
Avoca, Incorporated


         We have audited the accompanying  balance sheet of Avoca,  Incorporated
as of  December  31,  1996,  and the  related  statements  of  income,  retained
earnings,  and cash flows for each of the two years in the period ended December
31, 1996.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.
         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material respects, the financial position of Avoca,  Incorporated
at December 31, 1996,  and the results of its  operations and its cash flows for
each of the two years in the period ended December 31, 1996, in conformity  with
generally accepted accounting principles.



                                                     /s/ Ernst & Young LLP

New Orleans, Louisiana
January 13, 1997



                                                       AVOCA, Incorporated     5

<PAGE>

<TABLE>
<CAPTION>


BALANCE SHEET

                                                                                                       December 31
                                                                                                              1996
------------------------------------------------------------------------------------------------------------------

ASSETS

CURRENT ASSETS
<S>                                                                                                     <C>       
      Cash and cash equivalents                                                                         $   65,127
      Short-term investments                                                                             1,730,628
      Accounts receivable                                                                                   44,630
      Accrued interest receivable                                                                           24,262
      Prepaid expenses                                                                                       5,143
                                                                                                        ----------
                                                                    TOTAL CURRENT ASSETS                 1,869,790

PROPERTY AND EQUIPMENT
      Land and land improvements                                                                           613,751
      Buildings                                                                                             57,450
                                                                                                        ----------
                                                                                                           671,201
      Less accumulated depreciation and depletion                                                          595,651
                                                                                                        ----------
                                                                                                            75,550

OTHER ASSETS
      Long-term investments                                                                                639,169
      Avoca Drainage Bonds, $415,000, in default --
           at nominal amount                                                                                     1
                                                                                                        ----------

                                                                                                        $2,584,510
                                                                                                        ==========
</TABLE>





















                                            [Picture of oil tanks appears here.]

6     AVOCA, Incorporated

<PAGE>
<TABLE>
<CAPTION>



                                                                                                       December 31
                                                                                                              1996
------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS'EQUITY

CURRENT LIABILITES
<S>                                                                                                    <C>        
      Accounts payable and accrued expenses                                                             $   17,106
      Dividends payable                                                                                    373,725
      Income taxes payable                                                                                   9,221
                                                                                                        ----------
                                                               TOTAL CURRENT LIABILITIES                   400,052

DEFERRED INCOME TAXES                                                                                       13,902

SHAREHOLDERS'EQUITY
      Common stock, no par value -- authorized,
           issued and outstanding 830,500 shares
           (no change during the year)                                                                      94,483
      Retained earnings                                                                                  2,076,073
                                                                                                        ----------
                                                               TOTAL SHAREHOLDERS'EQUITY                 2,170,556
                                                                                                        ----------
                                                                                                        $2,584,510
                                                                                                        ==========





See accompanying notes.
</TABLE>














                                          [Picture of fishing pier appears here]


                                                           AVOCA, Incorporated 7

<PAGE>

<TABLE>
<CAPTION>


STATEMENTS OF INCOME

                                                                                       Year ended December 31,
                                                                                    1996                      1995
------------------------------------------------------------------------------------------------------------------

Revenue:
<S>                                                                            <C>                       <C>      
      Royalties                                                                $ 234,289                 $ 107,969
      Less severance taxes                                                         5,240                     6,291
                                                                               ---------                 ---------
                                                                                 229,049                   101,678

      Seismic permit fees                                                        356,830                        -
      Lease bonuses and delay rentals                                             84,075                    32,250
      Interest income                                                            121,531                   111,537
      Rental income                                                               27,700                    33,600
      Other                                                                        8,309                    10,837
                                                                               ---------                 ---------
                                                                                 827,494                   289,902
Expenses:
      Attorney fees and expenses                                                  18,093                    19,237
      Auditing fees                                                               15,000                    15,000
      Bookkeeping and clerical services                                            5,250                     5,000
      Management fees                                                             41,000                    40,000
      Directors' fees                                                              5,000                     6,500
      Geological and engineering fees and expenses                                14,349                     6,243
      Insurance                                                                   23,366                    23,937
      Office and miscellaneous expenses                                           23,272                    30,204
      Taxes, other than income taxes                                              23,664                    23,742
      Repairs and cleanup expenses                                                11,126                     4,116
                                                                               ---------                 ---------
                                                                                 180,120                   173,979
                                                                               ---------                 ---------
                                     INCOME BEFORE INCOME TAXES
                                         AND EXTRAORDINARY ITEM                  647,374                   115,923

Income taxes                                                                     223,723                    28,567
                                                                               ---------                 ---------

                               INCOME BEFORE EXTRAORDINARY ITEM                  423,651                    87,356

Extraordinary item,
      net of income taxes of $ 44,507                                                 -                     69,613
                                                                               ---------                 ---------

                                                     NET INCOME                $ 423,651                 $ 156,969
                                                                               =========                 =========

Earnings per share:
      Income before extraordinary item                                         $     .51                 $     .11
      Extraordinary item                                                              -                        .08
                                                                               ---------                 ---------
      Net income                                                               $     .51                 $     .19
                                                                               =========                 =========

Dividends per share                                                            $     .45                 $     .15
                                                                               =========                 =========


See accompanying notes.
</TABLE>


8     AVOCA, Incorporated

<PAGE>

<TABLE>
<CAPTION>


                                                 STATEMENTS OF RETAINED EARNINGS



                                                                                           Year ended December 31,
                                                                                    1996                      1995
------------------------------------------------------------------------------------------------------------------------------------

Retained Earnings:
      <S>                                                                    <C>                       <C>        
      Balance at beginning of year                                           $ 2,026,147               $ 1,993,753

      Net income for the year                                                    423,651                   156,969
                                                                             -----------               -----------

                                                                               2,449,798                 2,150,722

      Cash dividends:
        1996 - $ .45 per share                                                   373,725                         -
        1995 - $ .15 per share                                                        -                    124,575
                                                                             -----------               -----------

                   BALANCE AT END OF YEAR                                    $ 2,076,073               $ 2,026,147
                                                                             ===========               ===========


























See accompanying notes. 
</TABLE>

                                        [Picture of gas separator appears here.]

                                                           AVOCA, Incorporated 9

<PAGE>
<TABLE>
<CAPTION>



STATEMENTS OF CASH FLOWS

                                                                                        Year ended December 31,
                                                                                       1996                     1995
---------------------------------------------------------------------------------------------------------------------

OPERATING ACTIVITIES
    <S>                                                                         <C>                      <C>        
    Net income                                                                  $  423,651               $   156,969
    Adjustments to reconcile net income to net
      cash provided by operating activities:
        Depreciation expense                                                         2,735                     2,672
        Loss on disposition of asset                                                    -                      7,153
        Deferred income taxes                                                         (507)                   (7,390)
        Gain from litigation settlement                                                 -                   (181,000)
        Change in operating assets and liabilities:
           Accounts receivable                                                     (29,181)                       42
           Accrued interest receivable                                               3,147                     6,142
           Prepaid expenses                                                            151                        81
           Accounts payable and accrued expenses                                    (8,402)                   12,247
           Income taxes                                                            (27,603)                   37,497
                                                                                ----------               -----------

             NET CASH PROVIDED BY
             OPERATING ACTIVITIES                                                  363,991                    34,413

INVESTING ACTIVITIES
    Purchase of short-term investments                                          (1,008,097)               (1,935,247)
    Maturity of short-term investments                                           1,268,229                 2,772,113
    Purchase of long-term investments                                             (639,169)                 (722,531)
    Purchase of property and equipment                                                  -                    (31,200)
    Proceeds from sales of property and equipment                                       -                     15,750
    Litigation settlement proceeds                                                      -                    181,000
                                                                                ----------               -----------

             NET CASH PROVIDED BY (USED IN)
             INVESTING ACTIVITIES                                                 (379,037)                  279,885

FINANCING ACTIVITIES
    Dividends paid                                                                (124,575)                 (124,575)
                                                                                ----------               -----------

             NET CASH USED IN FINANCING ACTIVITIES                                (124,575)                 (124,575)
                                                                                ----------               -----------

             INCREASE (DECREASE) IN
             CASH AND CASH EQUIVALENTS                                            (139,621)                  189,723

Cash and cash equivalents at beginning of year                                     204,748                    15,025
                                                                                ----------               -----------

             CASH AND CASH EQUIVALENTS
             AT END OF YEAR                                                     $   65,127                 $ 204,748
                                                                                ==========               ===========







See accompanying notes.

</TABLE>

10     AVOCA, Incorporated

<PAGE>



                          NOTES TO FINANCIAL STATEMENTS

December 31, 1996

NOTE A--Significant Accounting Policies

General: Avoca,  Incorporated (the Company) owns and leases land, located in St.
Mary Parish,  Louisiana,  to unaffiliated  parties for oil and gas  exploration.
Mineral income in the  accompanying  financial  statements is primarily  derived
from lease bonuses,  delay rentals,  seismic permit fees and royalties  received
from  oil and gas  production  related  to these  leases.  Estimates  of  proved
reserves related to the leases are not available.

Cash Equivalents: Cash equivalents consists of United States Government Treasury
bills with a maturity of three months or less from date of purchase.

Investments: Short-term investments consist of United States Government Treasury
bills with a maturity of greater  than three  months but less than one year from
date of purchase and a United States Agency note due in 1997.

Long-term  investments  consist of United  States  Government Treasury Notes due
in 1998.

Management determines the  appropriate  classification of debt securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
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,  1996  all  short-term  investments and long-term investments were
classified as held-to-maturity.  The fair value of the investments  approximated
the carrying value at December 31, 1996.

Property and  Equipment:  Land is carried at cost less amounts  received for the
sale of rights-of-way and similar servitudes. Land improvements and building are
carried at cost and depreciated over their estimated useful life of 30 years.

Income Taxes:  The Company accounts for income taxes using the liability method.

Use of Estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles 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.

NOTE B--Income Taxes

The  components  of income tax expense  for the years  ended  December 31 are as
follows:

                                     1996          1995
                           -------------- -------------
 Current:
     Federal                     $200,184       $32,875
     State                         24,046         3,082
                           -------------- -------------
          TOTAL CURRENT           224,230        35,957
 Deferred :
     Federal                         (453)       (6,757)
     State                            (54)         (633)
                           -------------- -------------
          TOTAL DEFERRED             (507)       (7,390)
                           -------------- -------------
                                 $223,723       $28,567
                           ============== =============

The deferred income tax liability of $13,902 relates to a difference between the
accounting and income tax basis of property and equipment.

The  Company  paid  income  taxes of  $252,664  and  $42,967  in 1996 and  1995,
respectively.

                                                          AVOCA, Incorporated 11

<PAGE>



NOTES TO FINANCIAL STATEMENTS (Continued)

B. Income Taxes (continued)

The  reconciliations  between  the  federal  statutory  income  tax rate and the
Company's  effective  income tax rate,  based on income  before income taxes and
extraordinary item, for the years ended December 31 are as follows:

<TABLE>
<CAPTION>

                                                                1996                 1995
                                                          Amount     Rate     Amount      Rate
                                                         --------    ----     -------     ----
<S>                                                      <C>         <C>      <C>         <C>  
Tax expense based on federal statutory rate              $220,107    34.0%    $28,460     24.6%
Statutory percentage depletion                            (11,949)   (1.8)    ( 5,506)    (4.8)
State income taxes (net of federal income tax
deduction)                                                 24,045     3.7       2,449      2.1
Other                                                      (8,480)   (1.3)      3,164      2.7
                                                         --------    ----     -------     ----
                                   INCOME TAXES          $223,723    34.6%    $28,567     24.6%
                                                         ========    ====     =======     ====
</TABLE>




















[Picture of valve appears here.]

12     AVOCA, Incorporated

<PAGE>



                                                              NOTES TO FINANCIAL
                                                          STATEMENTS (Continued)
NOTE C--Major Customers

The net  royalties  received  from  two  independent  oil  and  gas  exploration
companies  accounted for 99% of total net royalties  recorded for the year ended
December 31, 1996;  net  royalties  received  from one  independent  oil and gas
exploration  company  accounted  for 94% for the year ended  December  31, 1995.
Substantially  all of the lease bonus and delay  rental  revenue in 1996 was the
result of leases with two companies and in 1995 with one company. Seismic permit
fees  recognized  in 1996 are the  result  of  permits  with  three  oil and gas
exploration companies.

Note D--Related Party Transactions

A member of the Board of  Directors is of counsel with the law firm which serves
as legal  counsel for the  Company.  Fees paid to this law firm were $25,377 and
$66,626 for the years ended December 31, 1996 and 1995, respectively.

NOTE E--Oil and Gas Quantities Produced

The  following  table  reflects the  Company's  share of the oil and gas volumes
produced from leases held under production during each of the last two years:

 
                                                      Production
                                              --------------------------
                                                   Oil          Gas
                                                 (BBLs)        (MCFs)
                                              ------------- ------------
                                                  1,770        82,228
1996
1995                                                809        50,501

NOTE F--Litigation Settlement

In 1995,  the Company  settled for  $181,000  its ongoing  litigation  against a
roofing  company  and its  insurer  to recover  damages  for the total loss of a
building  which  was  destroyed  by fire in 1992.  The  Company  recognized  the
proceeds,  net of related legal expenses of $66,880 and income taxes of $44,507,
as an extraordinary  item in the 1995 statement of income. The roofing company's
counterclaim against the Company was dismissed in 1995 and the roofing company's
appeal was dismissed in 1996.

NOTE G--Commitment

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 island for the  purpose of
hunting wild game and birds,  and for  noncommercial  fishing.  The terms of the
lease  commenced June 1, 1994 for a period of ten years with the Club having two
ten-year  options to extend the  lease.  Under the terms of the lease,  the Club
constructed a new building  including a separate apartment for the exclusive use
of the Company's  caretaker of the island.  This building  replaced the building
destroyed by fire in December 1992.  During 1994,  under the terms of the lease,
the Company  contributed  $50,000,  which  represents  the  approximate  cost to
construct the apartment.

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  unamortized  cost of the  building
(excluding the Company's cash contribution), based on straight-line depreciation
over 30 years. Under the lease, the Club's unamortized cost of the building will
be reduced over time to an ultimate reimbursable amount not less than $80,000.

                                          [Picture of marsh scene appears here.]

                                                          AVOCA, Incorporated 13

<PAGE>



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 more than 94% of
its  assets,  as measured by book  value,  are cash and cash  equivalents,  U.S.
Government and U.S.  Government agency securities.  Current  liabilities at year
end were $400,052,  including a $373,725  dividend declared in December 1996 but
not paid until  January  1997.  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. Current
financial  resources and  anticipated  net income are expected to be adequate to
meet cash requirements in the year ahead.

1996 As Compared to 1995
The Company enjoyed a commendable  year in 1996.  Revenue for the year increased
by $537,592. Most of the increase,  reflected in the income statement as seismic
permit fees,  comes from the granting of three new 3-D seismic permits  totaling
$356,830.  The first  permit was granted to  Geco-Prakla,  Inc. and covers 3,073
acres on the western part of Avoca Island.  The second permit,  granted to Texas
Meridian Resources Exploration, Inc., covers 7,535 acres on the southern part of
the island and  includes an option  until  January 10, 1998 to lease all or part
(not less than 753 acres) of the permitted acreage for mineral development.  The
third permit,  granted to Burlington Resources Oil & Gas Co., covers 7,330 acres
on the northern  part of the island and  includes an option  until  December 12,
1997 to lease all or part (not less than 3,665 acres) of the  permitted  acreage
for mineral development.
         Also  contributing to increased  revenue in 1996 was a $127,371 or 125%
increase in royalty income net of severance  taxes. The increase is attributable
to the successful workover of the Intercoastal  Shipyard No. 2 well in the Ramos
Field.  This  well was  restored  to  production  by its  operator,  Black  Gold
Production Company,  Inc., during the second quarter of 1996 and was responsible
for approximately 44% of the Company's 1996 royalty income. It produces from the
Ramos Field, B Sand Unit B under the Capital Energy, Inc. lease dated January 2,
1996.  Since its return to production  total gas and condensate  recoveries from
the  Intercoastal  Shipyard  No. 2 well (in which the  Company has a net revenue
interest of  approximately  4.05%) was 883,498  thousand cubic feet (Mcf) of gas
and 25,473 barrels of condensate.
         In 1996 the Delta Operating  Corporation  (formerly  Alliance Operating
Company)  Avoca  No.  1 well  also  in  the  Ramos  Field  was  responsible  for
approximately 56% of the Company's royalty income,  down from 94% in 1995. Total
gas and  condensate  recoveries  from the Avoca No. 1 well (in which the Company
has a net revenue interest of  approximately  19%) decreased from 259,513 Mcf of
gas and 4,158  barrels of  condensate  in 1995 to  238,455  Mcf of gas and 3,787
barrels of condensate in 1996. In September,  the operator  performed a chemical
treatment  on the well to clean the  producing  formation  near the  wellbore in
order to improve the well's performance.  The operator has told the Company that
the treatment appears to have been successful in improving production.
         The Exchange Oil & Gas (formerly Boo-Ker Oil & Gas) Avoca No. B-1 well,
also located in the Ramos Field, produced minimal royalty income for the Company
in 1995. The well was plugged and abandoned in the first quarter of 1996.
         Lease  bonuses and delay rentals  increased by $51,825  because two new
mineral  leases were granted in 1996 as compared  with none in 1995.The  Company
received  $5,625 on a new lease from Capital Energy,  Inc., as mentioned  above,
and $46,200 from Burlington  Resources Oil & Gas Co., on a 420 acre lease on the
northern  part of Avoca Island in August,  1996. I P Petroleum  Co., Inc. made a
quarterly delay rental payment in the first quarter of 1996 but the lease lapsed
for non-payment of the quarterly payment due in the second quarter of 1996.
         Interest  income  on  U.S.   Government  and  U.S.   Government  agency
securities increased $9,994 or approximately 9% because of higher interest rates
and the  availability  of more funds for  investment.  Rental  income  decreased
$5,900 or approximately 18% because of the lapsing of a short-term surface lease
at the end of 1995.
         Overall expenses were $6,141 or approximately 4% higher in 1996 than in
1995. Increased geological and engineering fees and repairs and cleanup expenses
were partially offset by reduced office and miscellaneous expenses and decreases
in attorney fees,  director  fees,  insurance and taxes other than income taxes.
The decrease in office and  miscellaneous  expenses  resulted  primarily  from a
$7,153  one-time  loss incurred in 1995 on the sale of a mobile home provided by
the Company as temporary housing for the Company's  caretaker on the island. The
increase in repairs and cleanup  expenses was  attributable to funds expended to
assist in preparing 600 acres of farm land on Avoca Island for the establishment
of a cattle operation.
         In  comparison  with 1995  (including  the  income  tax  related to the
extraordinary  item),  income tax  expense for 1996  increased  by $155,224 as a
result of increases in income and the Company's effective tax rate.
         Income  before  extraordinary  item  increased by $336,295 or 385%,  in
comparison  with the  prior  year,  but  income  after  the  extraordinary  item
increased only $266,682 or 170% from 1995. Net income was $.51 per share in 1996
as compared to $.11 per share  before and $.19 after the  extraordinary  item in
1995.  Dividends per share went from $.15 per share to $.45 per share in 1996 as
a result of an increase in income. Future dividends will be largely dependent on
the amount of oil and gas related income received.
         Further  information  regarding the Company's  financial  condition and
results of operations is contained in the President's message on page 4.

14     AVOCA, Incorporated

<PAGE>



                                                        STOCK PRICES AND RELATED
                                                         SECURITY HOLDER MATTERS

As of January 10, 1997,  there were  approximately  819 holders of record of the
Company's stock, which is traded in the over-the-counter market.
         The following  table shows the range of high and low bid quotations for
the Company's  stock for each  quarterly  period  during the last two years,  as
quoted by the National Quotation Bureau,  Incorporated.  Such quotations reflect
inter-dealer prices, without retail mark-up, markdown or commissions and may not
necessarily  reflect  actual  transactions.  The table also shows the amount and
frequency of cash dividends declared by the Company during the same period.

<TABLE>
<CAPTION>

Period                  High      Low       Declared      Record Date    Date Paid    Amount
1996
<S>                     <C>       <C>       <C>             <C>           <C>          <C>
  First Quarter         $6.75     $5.87
  Second Quarter         8.00      5.87
  Third Quarter          8.25      7.50
  Fourth Quarter         9.75      7.50     12-20-96        1-7-97        1-21-97      $.45

1995
  First Quarter         $6.50     $5.50
  Second Quarter         6.25      5.50
  Third Quarter          6.25      5.50
  Fourth Quarter         6.50      5.75     12-12-95        1-5-96        1-19-96      $.15
 
</TABLE>


AVOCA
INCORPORATED
The Company will furnish without charge a copy of its 1996 Annual Report on Form
10-KSB to be filed with the  Securities and Exchange  Commission,  including the
financial  statements  thereto,  to any record or beneficial owner of its Common
Stock as of  February  7,  1997.  Requests  for the  report  must be in  writing
addressed to Avoca, Incorporated,  P.O. Box 61260, New Orleans, Louisiana 70161,
Attention:  M. Cleland Powell.  If made by a person who was not a shareholder of
record on February 7, 1997, the request must include a good faith representation
that such person was a beneficial owner of Common Stock on that date.  Copies of
any exhibits to the Form 10-KSB will be furnished  upon payment of $.20 per page
plus postage to cover the cost of furnishing such copies.

                                                          AVOCA, Incorporated 15

<PAGE>



                       [Map of Avoca Island appears here,
                    showing property of Avoca, Incorporated,
                       mineral leases and well locations]


<PAGE>
<TABLE>
<CAPTION>
MINERAL INCOME

------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
                                                                                                                Income Recognized
                                                                                                                     in 1996
                                                                                                              Lease
                                                                                                    Initial   Bonus         
                                                               Date of                              Rental    or Delay
Lessee                            Operator                     Lease      Acreage  Expiration       Per Acre  Rental   Net Royalties
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                           <C>       <C>      <C>               <C>      <C>       <C>

Texaco, Inc.                      Texaco, Inc.                  5/17/63    41.900  Termination       $  75    $    --   $    452
                                                                                   of production

Alliance Operating Company        Delta Operating Corporation   8/14/87   276.733  Termination       $ 200         --    127,501
                                                                                   of production

IP Petroleum Company, Inc.        IP Petroleum Company, Inc.    10/3/94   860.000  Terminated        $ 150     32,250         --
                                                                                   4/30/96 due to
                                                                                   non-payment
                                                                                   of rental

Boo-Ker Oil and Gas Corporation   Exchange Oil and Gas Company *10/6/94   185.440  Well plugged and  $  --         --        652
                                                                                   abandoned first
                                                                                   quarter of 1996

Capital Energy, Inc.              Black Gold Production        **1/2/96    45.029  Termination       $ 125      5,625    100,444
                                  Company                                          of production
                                                                                   or 1/2/97 if
                                                                                   nonproducing

Burlington Resources Oil & Gas    Burlington Resources Oil &    8/12/96   420.000  Termination       $ 110     46,200         --
Company                           Gas Company                                      of production
                                                                                   or 8/12/99 if
                                                                                   nonproducing
                                                                                                              -------    --------
                                                                                                              $84,075    $229,049
                                                                                                              =======    ========

*---This  lease  supersedes  a lease dated August 21, 1990 with the same lessee.
**---This  lease  supersedes  a lease dated  January 19, 1960 with Cabot  Carbon
Corporation.
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