Valve's Gabe Newell has put a confirmation sticker on the Source 2 engine reports that have cropped up over the past few months.
Joystiq reports that the company's boss was ‘confronted' on his birthday from fans of 4chan's /v/board – confirming some
"We've been working on new engine stuff for a while,” Newell answered when questioned if Valve was working on a new Source engine. "We've just been waiting for a game to roll it out with."
Newell added that the subject in question would in fact be an entirely new engine, and not just an extension of Source.
Valve files containing lines of code referencing a Source 2 engine were uncovered back in August, along with icons for Source 2 tools.