The Santos Ltd (ASX: STO) share price has been on fire lately, rising 25% since the start of September.
The energy producer's shares finished Tuesday up another 1.49% to $7.49 apiece.
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What's driving Santos shares higher?
Investors have been buying up Santos shares after they were trading as low as $5.99 last month.
Santos updated the ASX regarding its merger plans with energy peer Oil Search Ltd (ASX: OSH) on 10 September. It advised that the two companies entered into a definitive agreement to combine in an all-scrip transaction.
Oil Search shareholders are set to receive 0.6275 new Santos shares for each Oil Search share held. Upon completion, this would give Oil Search shareholders a 38.5% stake in the newly merged entity. Santos shareholders will retain the remaining 61.5% interest.
The merged group will become the ASX's largest oil and gas company and a top 20 global player. In essence, this would give the merged company a diversified portfolio of long-life and low-cost assets with significant growth options.
It is expected that the implementation date will be 16 December 2021.
Another reason why Santos shares are moving higher is the rising price of the West Texas Intermediate (WTI). From 20 September, the WTI has surged from trading around US$70.14 per barrel to now US$80.87 per barrel. This represents an increase of about 15% over the past 3 weeks.
What do the brokers think?
A number of brokers have weighed in on the Santos share price last month following its merger update.
Swiss investment firm UBS raised its price target by 2.4% to $8.65 for Santos shares. Meantime, JPMorgan also lifted its outlook. The multinational investment bank improved its view by 0.6% to $8.05 per share.
Both brokers' assessments on the current Santos share price imply an upside of around 18% and 10%, respectively.
About the Santos share price
It's been a strong 12 months for Santos shares, rising to almost 46% with year-to-date up 19% so far. It's worth noting that the company's share price is nearing its 52-week high of $7.84 achieved earlier this year.
Based on today's price, Santos commands a market capitalisation of roughly $15.58 billion and has approximately 2 billion shares outstanding.
