The board said it was unanimously of the view that the proposal is wholly inadequate, highly conditional and materially undervalues the company.
Shares in the group closed down 3.5p yesterday at 326.5p.
In a separate statement, Oil India and Indian Oil Corporation confirmed that they had made a joint approach for the company.
However the statement did not provide any details beyond saying that the approach was for an all-cash offer.
There have been suggestions that a take-out price of 400p might be necessary to get a board recommendation.
In a note to investors, analyst house Fox-Davies Capital called the 315p offer very well pitched as a first offer saying it may eventually lead to negotiations.
However Fox questioned the likelihood of an offer as high as 400p.
There have been suggestions that the Chinese oil and gas giant Sinochem has already approached Gulfsands but has also been rebuffed by the board.