About 1 billion barrels of oil have been discovered off Mexico's coast, amid a glut of global supplies.

Premier Oil, a UK oil and gas company, said Wednesday that its Zama well was the first offshore exploration drilled by a private company in Mexico. Premier Oil partnered with Talos Energy and Sierra Oil & Gas.


The Mexican government in 2013 began constitutional reforms that ended the decades-long monopoly that the state-owned oil company Pemex had held, opening up the industry to foreign investors.Last week's discovery capped a big day for Mexico's oil industry. Italian oil and gas company Eni raised the estimated amount of oil it discovered in March to 1 billion barrels. And, the Mexican government successfully auctioned 21 of 24 onshore oil fields to private companies, according to Bloomberg.

Premier Oil's well has a breakeven cost of around $25 per oil barrel, said Anthony Durrant, the CEO of Premier Oil, during a call with investors. "At that level, it would be a profitable project clearly," Durrant said.

to understand the full

extent of our success here before we make any firm [capital-spending] decisions." The company on Thursday lowered its full-year capital expenditure guidance from $350 million to $325 million.


Durrant said Premier Oil plans for the Zama well to be appraised in 2018 "

Premier Oil shares listed in London surged 29% last week following news of the discovery.