string somedata = "VM3529,VM3530,VM3531,VM3532,VM3533,VM3534,VM3493,VM3494,VM3495,VM3496,VM3497,VM3498"; 
//1,2,3,5,27,28,29,30,31,32,33,34,35,36,37,38,39,40,41,42,43,44,45,46,47,48,49,50,51,52,53,54,55,56,57,58,59,60,61,62,63,64,65,66";
            string[] origindata = somedata.Split(',');
            int[] digits = somedata.Split(',').Select(s => Int32.Parse(Regex.Match(s, @"\d+").Value)).ToArray();
            string output = string.Empty;

            int firstn = digits[0];
            int firstindex = 0;
            int lastn = digits[0];
            int lastindex = 0;

            for (int i = 1; i < digits.Length ;i++ )
            {
                if(digits[i]==lastn+1)
                {
                    lastn = digits[i];
                    lastindex = i;
                }
                else
                {
                    output += origindata[firstindex];// firstn;
                    if (lastn != firstn) 
                    {
                        output += string.Concat("-", origindata[lastindex], ",");// lastn
                    }
                    else
                    {
                        output += ",";
                    }
                    lastn = digits[i];
                    firstn = digits[i];
                    lastindex = i;
                    firstindex = i;
                }
            }
            if (lastn != firstn) output += string.Concat(origindata[firstindex], "-", origindata[lastindex]); //firstn  lastn

 
            Console.WriteLine(output);
            
            Console.ReadKey();

Connected to Oracle Database 11g Enterprise Edition Release 11.2.0.2.0 
Connected as test
 
SQL> with
  2    data as (select 'VM3529,VM3530,VM3531,VM3532,VM3533,VM3534,VM3493,VM3494,VM3495,VM3496,VM3497,VM3498' s# from dual),
  3    d1 as (select s#, instr(',' || s#, ',', 1, rownum) p1, instr(s# || ',', ',', 1, rownum) - 1 p2 from data connect by rownum <= 12),
  4    d2 as (select substr(s#, p1, p2 - p1 + 1) v# from d1),
  5    d3 as (select v#, translate(upper(v#), '0123456789ABCDEFGHIJKLMNOPQRSTUVWXYZ', '0123456789') n# from d2)
  6  select min(v#) || ' - ' || max(v#) result
  7  from d3
  8  group by n# - rownum;
 
RESULT
--------------------------------------------------------------------------------
VM3529 - VM3534
VM3493 - VM3498
 

 string[] somedata = "VM3529,VM3530,VM3531,VM3532,VM3533,VM3534,VM3493,VM3494,VM3495,VM3496,VM3497,VM3498".Split(',');
 List<Int32> digits = somedata.Select(s => Int32.Parse(Regex.Match(s, @"\d+").Value)).ToList();
 List<Int32> grpdigits = digits.Select(d =>  d - digits.IndexOf(d)).ToList();
 Int32[] groupeddigits = grpdigits.GroupBy(d => d).Select(d => grpdigits.IndexOf(d.Key)).ToArray();         
 for (int i = 0; i < groupeddigits.Count(); i++)
     {
     Console.WriteLine(String.Concat(somedata[groupeddigits[i]], " - ",
                    groupeddigits.Count() - 1 > groupeddigits[i] ? somedata[groupeddigits[groupeddigits.Count() - 1]-1] : somedata[somedata.Length - 1]));
      }