You are lucky the dogs have not been shot by the sheep owners! If you were in TX they would already be dead. Letting dogs roam free is NEVER a good thing!
It has been my observation that once this begins it does not end. Maybe obedience train the dogs to stay in a specific area if you are determined to let them roam free....will take a shock collar at this point, I speculate.
Sheep in a pen is not going to help, in my opinion, and there will come the day when one or more sheep get out.
Keep your dogs (and the sheep) safe. Keep them confined.
K9 Trainer in SoCal