And while the 19-year-old admits it has been a whirlwind year, he is keeping his feet on the ground.
"I'm over the moon. I'm really pleased that the coaches have faith in me," said Watkin, who has signed a three-year deal.
"It's hard to believe how quick things have moved on for me since signing my first contract, I never thought I'd come as far as I have this season, playing for the senior team in the PRO12 and in Europe.
"It's a massive step-up for me but I'm enjoying it. I know I've still got a long way to go yet but I'm proud to be part of the Ospreys squad.
In other news, Jeff Hassler will not be involved in Ospreys' end-of-season run-in after the club confirmed he is to undergo an operation for a lingering shoulder injury.
The Canadian winger scored in the Guinness PRO12 derby victory over Newport Gwent Dragons at the start of April.
But he has not fully recovered from the injury that he picked up during last autumn's Rugby World Cup - with the club now of the view that this is the right time for him to go under the knife.
"Jeff's had an ongoing shoulder problem that we've had to manage since his return from the Rugby World Cup last autumn which, although not affecting his rugby has impacted on aspects of his gym based preparation," said Ospreys medical performance manager Chris Towers.
"In light of him being unavailable this weekend anyway due to a short term soft tissue injury we have elected to repair the shoulder through surgery, giving him the maximum recovery time and the best preparation for next season."
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Guinness PRO12 Ospreys News
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