Update: Human Head stopped working on Prey 2 in November, source says. (Story)
No new information had been available on Human Head's Prey 2 sequel for several months now, leading to plenty of speculation that the game had been cancelled. But publisher Bethesda has finally put those rumors to rest, saying the game is still in development.
In a post on the Bethesda blog:
Development of Prey 2 has not been cancelled but the game will not be released in 2012 as planned. The delay is due to the fact that game development has not progressed satisfactorily this past year, and the game does not currently meet our quality standards. Prey 2 has shown great promise and we regret disappointing our fans. We have made a substantial investment in game development to deliver the experience fans want. We are determined only to release the AAA game that fans rightfully expect, and are unwilling to compromise our quality standards to meet a release schedule.
No indication was given on when we would hear more, but fans of the original should be relieved to know that the sequel is still in development. Hopefully, it won't go the way of Duke Nukem Forever.