UPDATE 2-Icahn demands SandRidge board shake-up to boost oversight

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Jan 9 (Reuters) - SandRidge Energy Inc's biggest shareholder, Carl Icahn, called on Tuesday for two of the U.S. shale producer's directors to be replaced, blasting the board for failing to rein in what he sees as profligate executives.

The campaign marked the latest in Icahn's intensifying dispute with SandRidge, with the billionaire investor successfully lobbying the company's board last month to abandon a planned $746 million purchase of rival Bonanza Creek Energy Inc.

Icahn said in a letter to Chairman John Genova that he wanted to nominate one new director, while the other would be determined by other large shareholders. Icahn did not specify which board members he would like removed, nor did he explain why he was not pushing for the entire five-person board to be replaced. http://bit.ly/2maIfz6

A representative for Icahn was not immediately available to comment. SandRidge did not immediately respond to requests for comment.

Oklahoma-based SandRidge, which emerged from bankruptcy last year, had billed the Bonanza Creek deal when announced last November as a key growth opportunity in the Denver-Julesburg Basin of Colorado.

Icahn, SandRidge's largest shareholder with a 13.5 percent stake, had called the offer "value-destroying," especially with the large amount of stock the company would have had to issue to fund it.

He also criticized Chief Executive James Bennett, who oversaw many of the decisions that precipitated SandRidge's bankruptcy filing, for his poor leadership. Bennett is a board member.

"Your apparent disregard for any semblance of accountability to the owners of SandRidge reminds me of the medieval belief in the divine right of kings," Icahn wrote.

Icahn in his letter demanded the company change its bylaws so that large transactions require approval from four of the five board members, rather than a simple majority.

Shares of SandRidge rose about 0.5 percent in Tuesday afternoon trading.

Analysts at Coker Palmer Institutional said the relatively muted share reaction was due to a recent run-up and the lack of direction beyond the board shake-up in Icahn's letter.

Despite the "tug of war" between management and Icahn, however, shareholders would likely be rewarded over time, the analysts added.

Icahn in the letter also pushed SandRidge to either terminate a poison pill shareholder rights plan announced in November as part of the Bonanza Creek deal or change how it could be implemented.

Icahn has not always been successful in agitating for change at energy companies. In 2016, his hand-picked director at Chesapeake Energy Corp resigned in what was widely seen as a tacit admission that the investor's turnaround strategy was not working fast enough. (Reporting by Ernest Scheyder; Editing by Meredith Mazzilli)