UPDATE 1-Hedge fund nominates 3 for VAALCO board

(Adds details on nominees)

PHILADELPHIA, April 25 (Reuters) - Hedge fund Nanes Delorme Partners on Friday submitted three nominees for the board of VAALCO Energy Inc (EGY.N), the oil and gas company it has urged to consider strategic options and put itself up for sale.

In a filing with the U.S. Securities and Exchange Commission, Nanes Delorme, which owns 8 percent of VAALCO, said its nominees would work with the rest of the board to "pursue options that we believe are in the best interests of all stockholders and which have the ability to maximize stockholder value."

Nanes Delorme, which previously urged VAALCO to hire an investment bank to sell the company to the highest bidder, said it questioned the current board's ability to improve "operating performance, corporate governance structure, future strategic direction and enhance stockholder value."

VAALCO could not be immediately reached for comment.

The fund proposed Julien Balkany, Leonard Toboroff and Clarence Cottman to serve as directors, according to the SEC filing. Shareholders will vote on the election of directors and other issues at the June 4 annual meeting in Houston.

Balkany, 27, is a managing director of the hedge fund's general partner and has a background in oil and gas investment banking. Toboroff, 75, is a director and vice chairman of Allis-Chalmers Energy Inc (ALY.N), while Cottman, 52, is president and founder of Legacy Energy Inc, a U.S. private oil and gas exploration and production company with assets in Louisiana and California.

Nanes Delorme, VAALCO's largest institutional shareholder, said it has had several discussions with the company over the past two weeks to outline its concerns. It said VAALCO made a proposal to expand its board to 8 members, up from 7, and to work to help Balkany get elected, according to the filing.

The hedge fund, however, said the company failed to address its other concerns, such as improving corporate governance practices, ceasing "ill-advised" oil exploration in the North Sea, and considering moving the company's stock listing to an exchange other than the New York Stock Exchange.

The fund reiterated its disappointment that VAALCO's stock has underperformed over the past year. It said VAALCO's stock trades at about 9.5-times earnings, while its peers trade at multiples of about 15.6-times earnings, the filing said.

Shares of VAALCO closed at $6.54, up 8 cents on the NYSE. (Reporting by Jessica Hall; editing by Carol Bishopric) (For more M&A news and our DealZone blog, go to here)