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UPDATE 1-VAALCO Energy and Nanes Delorme settle dispute

Fri May 23, 2008 10:20pm EDT

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(Adds dateline, new details throughout)

NEW YORK, May 23 (Reuters) - VAALCO Energy Inc (EGY.N) said on Friday it reached an agreement with hedge fund Nanes Delorme Partners to settle a dispute in which the fund had proposed three nominees for the energy company's board.

The company said Nanes Delorme, which owns 8 percent of VAALCO, has agreed to stop soliciting proxies for VAALCO's annual meeting and to vote its shares in support of VAALCO's director nominees.

In return, VAALCO has agreed to hire a new chief financial officer, add a new independent director and will recommend shareholders institute annual elections of all directors.

VAALCO also agreed to drop a lawsuit against the hedge fund.

In March, Nanes Delorme urged the company to consider its strategic options and put itself up for sale.

VAALCO President Russell Scheirman currently also holds the position of CFO. The company said it would separate the positions and start a search for a new CFO.

The company said the new independent director will be selected from the financial services community, "with expertise in the private equity, venture capital or hedge fund sectors."

VAALCO shares closed at $7.96 on the New York Stock Exchange on Friday, unchanged for the day. (Reporting by Michael Erman; Editing by Lincoln Feast)



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