Shares in Clyde continued to ignore the escalating war of words between the two companies, closing 0.5p lower at 117p, as the stock market continued to believe Gulf's 105p-a-share cash offer was no more than a sighting shot.
With 19 of the bid's scheduled 60 days elapsed, Gulf wrote to Clyde shareholders yesterday in response to the British company's first defence documentissued last Sunday. The Canadian bidder said Clyde's defence contained no new information and dismissed it as an attempt to "change the basis of calculating value, abandoning the traditional and widely accepted approach of net asset value".
Malcolm Gourlay, Clyde's chairman, responded angrily to the "very misleading" claim that there had been no new information. He said Clyde had furnished investors with several new pieces of information including an estimate of year-end reserves of 130 million barrels of oil equivalent, a 60 per cent increase on the 1995 figure, a list of targeted projects and details of Clyde's 1997 drilling programme.
Beneath the rhetoric, Gulf's bid has quickly been reduced to an argument, arcane to observers outside the oil business, over the correct method for valuing oil exploration companies and a dispute over which measure should best be used as a basis for calculating the premium implied by the offer price.
In its defence, Clyde asserted that the most appropriate measure of its value was a multiple of cash flow, similar to what some analysts describe as a "going-concern value", which takes into account the ability of a company's executives to add value to current assets via management and acquisition.
Gulf said yesterday that approach was "fundamentally flawed", favouring the use of a core, net asset value, which tends to produce lower, more conservative values.
Gulf chief executive JP Bryan said: "Oil and gas companies are valued primarily on the basis of their expected future cash flows. The most appropriate valuation methodology is therefore net asset value, which represents the present value of Clyde's projected future cash flows."
Mr Bryan is understood, however, to have told analysts in an initial presentation that a fair value for Clyde would be a 25 per cent premium to the company's "going-concern" value.
The market has focused on that measure and applied it to the latest estimate from Clyde's broker, Hoare Govett, of 95p to justify the current share price.