With the oil price threatening $100, it shouldn't be surprising to see shares in an oil major that's sitting on oceans of the stuff enjoying a strong run.

But when that company is BP (NYSE: BP) -- a fallen blue chip that seemed at times to be fighting for its very survival after April 2010's Deepwater Horizon oil spill -- the advance is more remarkable.

BP's share price is up 66% in barely six months since hitting its nadir on June 29. It has just dipped down on the day as I write, having earlier hit 5 pounds for the first time since last May.

Then: Bad BP
BP shares began their surge even as oil was still leaking into the Gulf of Mexico, proving again the old adage of buying at the point of maximum pessimism.

In the first few months of the spill, BP could do no right. What seemed very credible (if at times poorly presented) efforts to plug the well, clean up the mess, and not shirk from responsibility were all met with scorn from the White House and the U.S. media, and even BP's industry rivals. Investors fell over themselves to dump the shares.

Yet ironically, it was the first concrete bad news for shareholders that represented the low water mark for the company's share price.

The rally began within a fortnight of BP suspending its dividend and setting aside $20 billion in a special fund to meet compensation claims. Shareholders now knew for sure they'd be billions out of pocket, but at least some concrete figures were being put on the damage.

Now: BP not so bad
Since then, the previous situation has reversed.

Obviously it was straight-up good news for BP shares when the well was finally capped on July 15 and sealed in September. But various investigations since then haven't shied away from putting overall responsibility for the spill on BP -- yet the share price has advanced regardless.

This is the "less bad than it could be" school of good news, and Thursday's excerpt from the ongoing presidential commission into the spill squarely fits the bill.

Sure, BP was blamed again, and the commission even clarified earlier comments to stress that BP saved money due to the decisions it made with the well. Yet the commission didn't say that saving money was BP's prime motivation. Equally importantly, it doesn't only blame BP for the spill:

It resulted from clear mistakes made in the first instance by BP, Halliburton, and Transocean, and by government officials who, relying too much on industry’s assertions of the safety of their operations, failed to create and apply a program of regulatory oversight.

I suspect the market has decided that with many parties being blamed, it will be very hard to prove that BP was grossly negligent, especially in light of these further comments:

The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again. Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur.

Billions to spare
If BP is found guilty of gross negligence, the ultimate cost of the spill will be far higher than if it was merely incompetent. This is because under U.S. regulations, the maximum fine would rise from $1,100 to as much as $4,300 per barrel of oil spilled.

In this worst-case scenario -- and additionally assuming the U.S. government's contention that in 4.9 million barrels of oil leaked into the Gulf, despite BP's claims it spilt much less -- BP would face a penalty of $21.5 billion, which is roughly half of the $39.9 billion the company has already set aside to cover the cost of the disaster.

Kenneth Feinberg, the lawyer appointed by the U.S. government to deal with compensation claims, says his $20 billion fund will be "more than enough." BP has further spent around $10 billion on clean-up operations to date, which would seem to leave around $10 billion already set aside to cover penalties.

If BP was grossly negligent, then, it might need to find another $10 billion, which isn't too bad given it has already survived a $40 billion hit.

But if it's not found grossly negligent, as seems most likely, then it might have already set aside more money than it needs to.

Shell out
BP's case might be being helped too by a softening in the political rhetoric, from both the White House and in the presidential report. The latter notes:

Deepwater drilling provides the nation with essential supplies of oil and gas. At the same time, it is an inherently risky business given the enormous pressures and geologic uncertainties present in the formations where oil and gas are found -- thousands of feet below the ocean floor.

That sounds a lot more reasonable than the image of six months ago, when BP was portrayed as a bunch of latter-day limey pirates raiding America for all it was worth.

This week we also heard Royal Dutch Shell (NYSE: RDS-A) pondered a merger at the height of BP's woes. Hardly surprising, but it has perhaps woken up investors to the value in BP's assets, as has the $20 billion in asset sales it has already achieved.

Finally, BP is due to report within the next few weeks on its dividend. Given that it was previously one of the U.K.'s lynchpin dividend payers, equity income fund managers may well be buying the shares ahead of an imminent resumption.

Add it all up, and it's no wonder BP's share price is rising. I thought BP looked like a good value last July, and given developments since then it still looks good value at a fiver.

More company comment from Owain:

Owain doesn't own shares of any companies mentioned. The Fool owns shares of Transocean and has a disclosure policy.