It's unknown--at this point--whether Prey 2 is still in development, or if the game has been put on hold.
So where's Prey 2? That's the question Blues News is asking after a recent help wanted job posting emailed by Human Head Studios. The development studio is currently looking for additional employees to work in its Madison, WI offices. However Radar Group is the party behind the Prey sequel originally announced back in March 2007.
After emailing Human Head, Blues was redirected to Radar Group in regards to the Prey 2 status and have yet to receive a reply. However, superannuation stumbled across a blog from a Human Head employee saying that they just signed a contract for a major title, and another claiming that employees were taking "week-long furloughs to help with the cash flow," indicating that there are no current projects, including Prey 2.
"Unfortunately, we can't comment on the status of Prey 2, other than to say that we've never announced that it has been in development, so I'm not sure the starting assumption is actually valid," Human Head originally told Blues. "However, we obviously have a strong attachment to the project, and it's certainly something we're very interested in developing."
According to the Prey 2 press release (PDF) distributed last year, players reprise the role of Tommy, the native warrior who saved Earth from alien invasion in the first title. The game is supposedly in development--in cooperation with Human Head Studios--for the Xbox 360 and PC.