Liberty Bay, the lighthouse south west of the depot during pirate raid. Also, might appear randomly above pirate tavern in Nargor after completing the pirate killing task.
Strategy:
Stand still or use a Dwarven Ring because the drunkness is similar to that of djinns. For sorcerers/druids, it is highly recommended to use one of Ultimate Spells in order to kill other pirates around, get the most experience and loot the hat. You can treat him as slightly stronger version of Pirate Corsair so it shouldn't be too hard for any vocation to kill it.