Vaalco, Nanes Delorme settle proxy battle

Vaalco Energy Inc. and Nanes Delorme Partners I LP have agreed to settle a bitter proxy dispute less than two weeks before the two companies were set to duke it out at Vaalco's June 4 shareholders meeting.

Nanes Delorme, a New York-based hedge fund formed in January that owns 8 percent of the Houston exploration and production company, has agreed to cease soliciting proxies and will vote in support of all of Vaalco's director nominees.

In return, Vaalco has agreed to hire a new chief financial officer, an independent director from the financial services sector and recommend that shareholders vote to declassify the board to create an annual election of all board members beginning in 2010.

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W. Russell Scheirman, Vaalco president and CFO, will continue to serve as company president. Vaalco will separate the positions and hire a new CFO.

Also as part of the settlement, Vaalco (NYSE: EGY) has agreed to drop its lawsuit against Nanes Delorme.

In March, Nanes Delorme disclosed an accumulation of 4.7 million Vaalco shares and began demandingchangesthat included revamping the board and the possible sale of the company, which has oil property assets in West Africa.