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UPDATE 1-Elliott quietly ups pressure on Energen to explore sale -sources

(Rewrites with sources, adds background on Elliott, Energen and Corvex)

Aug 17 (Reuters) - Elliott Management Corp has quietly ramped up pressure on Energen Corp to explore a sale, according to two people familiar with the matter, as the U.S. oil and gas producer fends off heavy pressure from activist investors to sell itself.

The behind-the-scenes push by Elliott comes as fellow activist shareholder, Corvex Management, has waged a public campaign to force Energen to put itself on the auction block. Earlier this week, Corvex threatened to wage a proxy fight if Energen fails to meet its demands.

Elliott Management's position makes it an ally of Corvex, which will need the support of major shareholders in its quest to get Energen to find a buyer. Elliott shares Corvex's view that Energen's lagging stock price cannot be fixed through operational changes, and that the best way to boost its value significantly is through a sale.

Energen shares rose by as much as 8.2 percent on Thursday.

Hedge fund Elliott's investment is worth between 4 percent and 5 percent of Energen's shares, according to the two people familiar with the matter, a much larger stake than its public filings have revealed.

Elliott's quarterly securities filings show a roughly 1 percent stock position in Energen but these filings do not take into account swaps and other derivatives that can convert into shares.

Elliott built the stake around May of this year, when it first offered its views to the company, and has kept roughly the same exposure since, the two people familiar with the matter said. The sources asked not to be identified because full details of the stake and Elliott's dialogue are not yet public.

What has changed since May, these people said, is a steady increase in pressure by Elliott to convince Energen to launch an auction process.

Birmingham, Alabama-based Energen, a $4.5 billion energy company whose assets are concentrated in the Permian Basin in Texas, was not immediately available for comment.

Elliott declined to comment.

Corvex first targeted Energen on May 31, stating from the start of its campaign that it should explore the sale of the entire company. Energen announced a few weeks later that after reviewing Corvex's proposal and other strategic alternatives, it was sticking to its own business plan.

Energen has a nine-member, so-called staggered board, meaning certain directors are up for reelection in certain years, rather than all facing annual elections.

Corvex said on Monday that if Energen does not add new board members, its more-than-10 percent stake can invoke an Alabama state law that allows it to call a special meeting. Corvex said it would request a meeting where shareholders will vote to expand the board to 15 members, and to fill the six vacancies with Corvex nominees.

The Wall Street Journal was first to report Elliott's actual economic exposure to the company on Thursday.

(Reporting by Michael Flaherty in New York and John Benny in Bengaluru; Editing by Sai Sachin Ravikumar and Marcy Nicholson)