What: Oil and gas major Santos Ltd (ASX: STO) is enjoying some buying support today with the share price spiking 2.6% by mid-afternoon on Friday to a one-and-a-half-month high of $8 a share.
It comes as welcome relief for shareholders who watched in horror as their shares languished as low as $6.92 earlier this month.
So What: There would appear to be three drivers of the spike in Santos' share price today.
Firstly, general market momentum has seen the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) put on a solid 1.5% on Friday, which should help see the index close out the week's trading with a gain of approximately 0.9%.
Secondly, the oil price jumped overnight to its highest level this year, with the price of Brent oil up 3.4% to US$64.86 per barrel on Middle East tensions.
Thirdly, Santos reported this week that its massive Australia Pacific LNG (APLNG) project has powered up its first gas generator, which marks a significant milestone for the multi-billion dollar project. Eventually, Santos will need to bring seven gas turbines on line to provide electrical power to the facility and drive its two LNG processing trains.
Now What: It's quite possible that the oil price low is now behind investors. While those lows might be re-tested and while it could be some time before the price moves significantly higher, arguably a floor may have been established.
The end of the decline in the oil price will obviously be a positive for Santos and the oil and gas sector in general, however, the major game changer specifically for Santos remains the start-up of APLNG. News of the powering-up of the first gas generator brings the facility one step closer to start-up, and provides an added level of comfort to shareholders that the project will remain on time and on budget.
Despite the share price rally from the $7 level to the $8 level, Santos remains at a multi-year low and down 40% over the past 12 months. As such, investors would be well advised to remain focussed on whether they believe there is long-term value in the stock, or whether they have missed a short-term opportunity.