A former Valve developer named Tom Leonard seems to have been working on Source Engine 2 before he left the company during the January restructuring.
His LinkedIn account, which was dug up by fans from the NeoGAF forums, mentions Source Engine 2, but makes no mention of why Leonard left Valve or what he is currently working on.
Gabe Newell, the leader of the company, talked about the new engine during late 2012, but since then, the company has not offered any real detail about the technology it is working on.
Apparently, Source Engine 2 will only be officially revealed once Valve has a high-profile game ready that uses it.
The restructuring process that took place seems to have led to long-term changes to the objectives of the developer, which might also have an effect on Source Engine 2 development.