Oil and gas drilling company Rowan Companies Inc said on Friday the director designated by Steel Partners II LP had resigned from its board because the activist hedge fund's stake fell below 5 percent.

Rowan agreed in February to expand its board to 12 members from 11 to accommodate a designee of Steel, which once held an effective 9.5 percent in Rowan as it sought to steer the direction of what it saw as an undervalued company.

The agreement cleared the way for Lawrence Ruisi's election to the board this year. But the agreement stated he would resign if Steel no longer had a 5 percent economic interest in Rowan, and Steel recently disclosed that its stake had fallen to 3.8 percent as of July 15.

Ruisi offered to resign on July 29, and the board accepted, according to a filing with financial regulators on Friday.

Rowan reports its second-quarter results on Tuesday. (Reporting by Braden Reddall, editing by Leslie Gevirtz)