The guys pretty much covered it. Start simple either with a compession check or pull the valve cover and take a peek at the valve seals. With the intake and exhaust closed you should be able to take a light and see if the seals are still in place. While your there you might also check the drain back holes in the lower corners of the head and make sure their open.

Replacing valve seals in car is pretty cheap and simple and the folks here can walk you through it.

Don't panic until you figure out what's wrong.