UPDATE 1-Proxy adviser won't support two VAALCO nominees

(Recasts, adds details on recommendations)

NEW YORK, May 22 (Reuters) - Proxy advisory firm Glass Lewis & Co. on Thursday recommended withholding support for two of VAALCO Energy Inc's (EGY.N: Quote, Profile, Research) three proposed board members, saying the board's approval of a poison pill was not in the interest of shareholders.

Glass Lewis said withholding votes from current board members Arne Neilsen and W. Russell Scheirman, who is also the chief financial officer, may provide the opportunity for two dissident nominees proposed by hedge fund Nanes Delorme Partners to be elected to the board.

However, the Glass Lewis report said its recommendation "does not constitute an endorsement of the dissident's future plans to pursue a sale of the company."

The firm recommended voting to approve the reelection of William Farish to the board.

Nanes Delorme, which owns 8 percent of VAALCO, has proposed three nominees for the VAALCO board, and has urged the company to consider its strategic options and put itself up for sale.

VAALCO's board passed a shareholders rights plan, or poison pill, that would allow it to issue new shares to dilute the stake of any potential buyer, making it unlikely a hostile takeover could succeed.

"The board's decision to adopt a poison pill without first seeking shareholder approval leads us to question whether the board is truly acting in the best interests of shareholders," Glass Lewis said in its report.

Glass Lewis said it agreed with some of Nanes Delorme's criticisms of VAALCO related to its underperformance versus its peers, but said it did not believe those issues merited the election of all three of dissident's nominees to the board.