Bethesda "misled gamers" over sci-fi shooter development, new report says.
Arkane Austin "scrapping all the work that Human Head has done and starting from scratch," says new report.
But lead level designer says "it's up to Bethesda to decide what to do with it".
Human Head has unannounced console project in the works, job ads suggest.
Game's release is simply too far off to be a major focus at this time.
Sainsbury's has knocked 20 per cent off the price of selected pre-orders in a special E3 promotion.
Work on the game stopped in November, another big project being developed at studio.
Bethesda releases statement on the game to clear up cancellation rumours.
Word on the Internet street is that Prey 2 has been cancelled by publisher Bethesda.
Bethesda has revealed the full presentation and panel schedule for QuakeCon 2011, with events kicking off on August 14 with the Annual Keynote from id Software co-founder and technical director, John Carmack.
QuakeCon, the annual video game festival, will begin on Thursday, August 4 with a keynote address from John Carmack, co-founder and technical director of id Software.