* Says reached $900 million in savings so far in 2016
* Sales fall 17 percent year-on-year $37.2 bln
* Adjusted net income down 30 pct year-on-year to $2.2 bln
* Shares among top gainers, up 1.5 percent (Adds details, Shell, share price)
By Bate Felix
PARIS, July 28 (Reuters) - French oil and gas major Total said on Thursday it had met its cost saving target ahead of schedule as increased output and an oil price rebound produced a better-than-expected rise in second quarter net profit.
Total said it had made $900 million in savings so far this year, which on top of $1.5 billon last year brings it to its target of $2.4 billion for the end of 2016 and it now hopes to save more by the year-end.
Chief Executive Officer Patrick Pouyanne said oil prices remained volatile, but Total had gained from a recovery in Brent crude from the start of the year when it went below $28 per barrel to average $46 per barrel in the second quarter.
Brent was down 10 cents at $43.37 per barrel by 0845 GMT on Thursday, steadying just above three-month lows on oversupply concerns.
"Total captured the benefit of this rebound, and adjusted net income rose to $2.2 billion in the second quarter 2016 (versus the first quarter), an increase of 33 percent compared to the first quarter," Pouyanne said in statement.
Even though oil production in the quarter rose by more than 5 percent, the fourth-biggest western oil company's revenue fell 17 percent to $37.2 billion compared with a year before.
A Reuters poll of analysts had forecast second quarter net adjusted profit of $1.9 billion and lower production levels.
Although its refining margin was stable at $35 per tonne compared with $35.1 the previous quarter, it fell 35 percent year-on-year.
Total's shares were up 1.5 percent by 0909 GMT, among the top gainers in the French blue chip CAC 40 index, outperforming a falling oil and gas sector index.
Rival Shell reported a more than 70 percent fall in quarterly profit, well below estimates, blaming weak oil prices, poor refining profits and higher charges resulting from its $54 billion acquisition of BG Group.
Total said the increase in oil output due to new projects coming on stream was dampened by deteriorating security in Nigeria and Yemen, and forest fires in Canada.
It said projects in Bolivia and Kazakhstan were expected to start in the second half of the year, helping it meet a 4 percent production growth target in 2016.
Capital expenditure in 2016 would fall to $18-19 billion, Total said, while also confirmed its objective to generate $2 billion from net asset sales in the year.
Total kept its dividend unchanged for the second quarter, at 0.61 euros per share to be paid in January in cash or new company shares with a 10 percent discount. (Reporting by Bate Felix; Editing by Andrew Callus and Alexander Smith)