Vaalco Energy Inc.

Vaalco Energy Inc., Houston, (NYSE: EGY) is seeking strategic alternatives, including the possible sale of the company, following pressure from New York-based hedge fund Nanes Delorme Partners I LP and associated entities following stock underperformance in 2007. Vaalco has assets in the Etame, Avouma and South Tchibala fields in Gabon, a 40% interest in Block 5 concession offshore Angola, a farm-in agreement to earn 25% interest in the 9-28b offshore license in the U.K. North Sea and minority interests in four wells in Texas. Production from the Gabon assets was 1.8 million barrels (500,000 barrels net) from July through September. Nanes Delorme holds 8% of the common stock of Vaalco, making it the largest independent stockholder. The hedge fund feels the company is undervalued and suggests the entire company or its West African portfolio be sold.