Shares in Pantheon Resources (LSE: PANR) bounced higher this morning, while Genel Energy (LSE: GENL) fell by more than 25%.

In this article I’ll explain what’s happened at each firm, and whether I’d buy or sell after today’s news.

Pantheon Resources

Shares in US explorer Pantheon traded as high as 138p when markets opened this morning, after the firm confirmed that its VOS#1 well is commercial. A flow test has delivered production rates of 750 barrels of oil per day (bopd) from this well.

Pantheon also confirmed today that the operator of the firm’s other well, VOBM#1, is in the final stages of negotiating with a potential buyer for the gas from this well. Commercial production of gas and liquids is expected to start by the end of the first quarter.

What’s next for Pantheon?

One of Pantheon’s boasts about its Eagle Ford shale sandstone acreage has been that it “can be developed without the need for either horizontal drilling or fracking”.

Given this, shareholders may be surprised to learn from today’s update that the next two items in Pantheon’s work plan are to frack the VOS#1 well and carry out horizontal drilling in the area around the successful VOBM#1 well.

In fairness, Pantheon says that fracking VOS#1 could triple production rates. However, the firm does warn that “a period of sustained production” will be required to assess how much improvement is possible. The risk is that production often declines quite rapidly from fracked wells.

My other concern is that cash could soon become tight. Pantheon said today that it has “various potential financing options available”. However, horizontal drilling and fracking add costs to simple vertical wells. At the end of June 2015, Pantheon reported net cash of around $5.5m.

I suspect more cash may soon be required and wouldn’t buy after today’s news.

Genel Energy

Shares in Kurdistan oil producer Genel fell by more than 25% this morning after the firm announced a 75% reduction in proven and probable (2P) reserves for its Taq Taq field. This field generated around 60% of Genel’s oil production last year.

Genel has previously reported 2P reserves of 683m barrels for Taq Taq. However, after production rates started to decline last year, Genel commissioned a review of Taq Taq’s reservoir model. The result is that estimates of the field’s original 2P reserves have been cut to 356m barrels. From this, 184m barrels have already been produced since 2011.

This leaves Taq Taq’s 2P current reserves at just 172m barrels. Genel’s 44% working interest equates to reserves of about 76m barrels.

The firm also has 169m barrels of 2P reserves in the Tawke field. This gives Genel total 2P oil reserves of 244m barrels, down from 429m barrels previously.

As I write, Genel shares are down by 25%, at 92p. Is this cheap enough to buy?

Genel’s current valuation implies a value of $2.48 per barrel for its 2P reserves. This does seem cheap, given that Genel has production costs of less than $2 per barrel.

However, the risk of further operational, political or payment problems seems high.

Genel shares could easily double in value if market conditions improve — but I’d only buy these shares with money I could afford to lose.

To be honest, I believe there are better buys elsewhere in today's market. One example is the small-cap pharma stock featured in 1 Top Small-Cap Stock From The Motley Fool.

The company in question isn't troubled by the oil price or nearby war zones. Operating from the safety of the UK, it's targeting a £4bn global market with one of its flagship products.

The Motley Fool's investment experts believe shares in this company could be significantly undervalued.

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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.