The Beast Egg is a quest item used for the Canyon Condor Quest. It drops from the Cockatrice. You must give the item to Svin in order to complete the quest.
According to what the Hermit says in the quest Canyon Condor, the "one traveler" that he is talking about might be Bob and the egg that he took from the Cockatrice might have become Cluckles, one of the 3 Bob's animals.
This might mean that Cluckles is actually a Cockatrice.
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