The oil sector is a tough place to be at the moment. The price of Brent crude oil dropped below $31 per barrel on Tuesday morning, for the first time in nearly 12 years.

Small oil stocks are hardest hit of all, making the 750% gain achieved by Pantheon Resources (LSE: PANR) over the last year even more impressive. But at more than 100p per share, is high-flying Pantheon still a buy?

In today’s article I’ll look at the latest flow-testing update from Pantheon, plus the latest updates from North Sea stocks Ithaca Energy (LSE: IAE) and Faroe Petroleum (LSE: FPM).

Pantheon Resources

Investors were encouraged last year when Pantheon’s first well in East Texas, VOBM#1, flow-tested at 1,500 barrels of oil equivalent per day (BOEPD).

Today’s news was less good as flow-testing of the VOS#1 well has been interrupted by a blockage. Pantheon shares dropped by as much as 20% but have since recovered and are currently almost unchanged.

Pantheon said today that the net pay and initial flow rates from VOS#1 were consistent with the well being able to provide a mid-estimate total recovery of 3m barrels of oil equivalent.

The firm plans to drill well over a hundred wells of this kind in its fields in East Texas, so the scale of the attraction is obvious. What makes Pantheon a potential special case is its low costs. According to a presentation published by the firm in December, capital expenditure and operating expenditure for each well are expected to be less than $5 per barrel.

However, it’s worth noting that only two wells have been drilled to date, and that at $30 per barrel, the current price of US crude is 25% below Pantheon’s lowest planning estimate of $40 per barrel.

In my view, a lot of potential success is already priced into Pantheon shares. I’m not sure they’re an obvious buy.

Ithaca Energy

Shares in Ithaca Energy fell by 8.5% to 19p this morning, despite the firm reporting that production is on track to double to 25,000 BOEPD after the Stella field starts up later in 2016.

One problem is that the price of oil is now almost level with Ithaca’s operating cost of $30/BOE. Although 10,000 BOEPD is hedged at about $61/BOE until mid-2017, the firm also has debt costs, $50m of planned capital expenditure, and corporate overheads to fund.

Ithaca’s net debt of $665m means that pressure on cash flow is likely to remain intense. Ithaca could be a superb recovery buy when the market starts to improve, but I think it might be wise to sit on the sidelines for a little longer yet.

Faroe Petroleum

Norwegian specialist Faroe said today that it has spudded (started drilling) the Kvalross prospect in the Barents Sea. The well, in which Faroe has a 40% interest, will test two targets with “significant oil and gas resource potential”.

This is something of a wildcat so the risks of disappointment are high. But regardless of this I believe Faroe is a worthwhile addition to a watch list of oil recovery stocks. The group has net cash and a solid production profile. When the price of oil starts to recover, Faroe could perform strongly.

I rate Faroe and Ithaca highly, but I'm not sure now is the right time to buy into small-cap oil stocks.

I think bigger potential profits may be on offer elsewhere. One opportunity that's caught my eye recently is the stock featured in A Top Growth Share From The Motley Fool.

The Fool's top experts believe the valuation of this company could triple over the next few years.

I'm not sure how many oil stocks will manage that feat.

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Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.