Bethesda announced earlier today that Prey 2 would not launch in 2012. Rumors suggest development is troubled, with Human Head Studios having suspended work on the FPS since November 2011.

Word comes from a source close to Shacknews, who claims work was intentionally stopped in the hopes of negotiating better contract terms with Bethesda owner Zenimax. Many employees were reportedly laid off as a result, with Human Head aiming to rehire them once the contract was satisfactory. According to the source, the game was in limbo until March, when things finally "soured."

Bethesda claimed the delay was "due to the fact that game development has not progressed satisfactorily this past year." Beyond that, the company wouldn't comment on the future or in what shape Prey 2 is in.

This article was originally published on Joystiq.