ENERGY/FOREIGN INVESTORS Lured by the weakening dollar and the conviction that oil prices are poised for a rebound, European energy companies are buying up cheap U.S. oil and gas reserves to replenish their supplies, oil industry analysts said. They said owning oil reserves in a politically stable United States is good insurance against future shortages. However, the quick pace of foreign investment has heated up competition among European firms, well-heeled U.S. institutional investors and major oil companies to snare choice domestic oil properties. Strevig and Associates, a Houston firm that tracks oil and gas reserve sales, said growing interest among foreign buyers had helped push reserve prices in recent months higher. All buyers of U.S. reserves paid a median price of 6.45 dlrs a barrel of oil during the fourth quarter of 1986 for acquisitions, up from 5.33 dlrs in the third quarter and five dlrs in the second quarter, according to the firm's research. "Foreign investors have been here nibbling a long time, but we're seeing new names and smaller companies coming in," said Arthur Smith, an oil property appraisal specialist and president of John S. Herold Inc in Greenwich, Conn. "Europeans, especially, do not have much indigenous oil and gas and realize the tide will eventually turn in favor of the Organization of Petroleum Exporting Countries," he added. Smith and other oil industry analyst and economists believe the trend in foreign investments will continue in 1987 because of the fall in value of the U.S. dollar, the perception that oil prices have hit bottom and the fact that it is cheaper to buy new reserves than to explore for them. Plenty of properties are available on the market, thanks to the need of many companies to raise cash for debt payments and general restructuring throughout the oilpatch. In two of the biggest transactions of recent months, French-owned Minatome Corp., a unit of <Total Compagnie Francaise des Petroles>, spent more than 230 mln dlrs to separately acquire oil assets of Texas International <TEICC> and Lear Petroleum Partners <LPP>. A spokesman for Minatome said the company is searching for additional acquisitions. A partnership of two Belgian-owned firms, <Petrofina S.A.> and <Cometra Oil S.A.> paid 150 mln dlrs late last year to buy virtually all the exploration assets of the Williams Cos <WMB>, the Oklahoma pipeline firm. But Japanese investors prefer entering into joint ventures with experienced U.S. companies to explore for new oil. Japan's <Nippon Oil> is a partner of Texaco Inc's <TX> Texaco USA in a 100 mln dlrs U.S. drilling program, and has joined with Dupont's <DD> Conoco Inc in a similar 135 dlrs mln deal. Most buyers said the pay-back period of a property, its geographic location and the lifting cost of the crude oil are more important factors in evaluating potential acquisitions than relying on a simple price-per-barrel formula. Rich Hodges, a Houston-based land manager representing International Oil and Gas Corp, a partnership of <Preussag Corp> and <C. Deilmann Inc> of West Germany, said the firm had earmarked at least 50 mln dlrs to spend on oil reserves in Texas, Oklahoma or Louisiana in the coming months. But he called that a small amount compared to the amount other investors have for acquisitions. PaineWebber's Geodyne Energy Income Fund, for example, has said it plans to spend up to 300 mln dlrs on oil and gas properties. "The competition is stiff, not only from other foreign investors but from the brokerage houses and U.S. oil companies," he said. "Our company is shopping around because we feel it's substantially less risky than pure exploration. If you're going to take the risk inherent in exploration, you need prices higher than the current market," he added. In addition to the foreign investors and U.S. brokerage houses, analysts said many of the major oil companies were also competing for prime properties. Houston-based Shell Oil Co, a unit of Royal Dutch/Shell Group <RD>, has been one of the most active companies in buying and selling reserves, Smith said. Since 1982, Shell has acquired two billion dlrs in new reserves, including 470 mln barrels of oil equivalent at a net cost of 2.80 dlrs a barrel, he said. "Buying reserves is a good strategy for most of these companies," Smith said. "Domestic production has dropped by one mln barrels a day because of cutbacks in drilling and it may drop by another one mln barrels a day in 1988."