Complex sentence: In August 2012, the Valve fan site "ValveTime" speculated that Valve might be in development of a "Source 2" engine, based on coding from the Source Filmmaker that directed technology from the upcoming version.
Split into simpler sentences: In August 2012, the Valve fan site "ValveTime" revealed that Valve might be in development of a "Source 2" engine. The announcement was based on coding from the Source Filmmaker that directed technology from the upcoming version.