NEWS that Premier Oil has made what looks like a massive find off Mexico triggered huge excitement on both sides of the Atlantic yesterday.

With shares in Premier rising 35 per cent the find underlined the potential for exploration success to have a transformational effect on the valuations of UK oil and gas firms.

The Mexican government can feel the controversial decision to invite international firms in to the country to try to boost production has been vindicated.

Edinburgh-based Cairn Energy has reasons to feel smug too. It recently won a licence to explore off Mexico.

Cairn and Premier see potential in the North Sea where they are developing the giant Catcher find.

However, the challenges Premier faced developing the Solan field West of Shetland underlined how difficult it can be to work in the harsh conditions seen off Scotland.

Some may have concerns Premier’s success in making such a big find in shallow waters off Mexico will leave the North Sea facing increased competition for investment amid what is likely to be a long period of low oil prices.