Oil leaking out of #2 exhaust header!

I am resurrecting a kz650 and everything seemed to be going well. after adjusting the carbs, i started it up and the engine sounded beautiful BUT oil is dripping out of the #2 exhaust header at a pretty good rate. any idea where to begin to diagnose the problem?

I heard theres oil passages near the exhaust ports? Maybe a crack where a stud goes into the head from the ehaust flange bolt? Does it start running funny when it starts leaking. Hows the plug look on number#2, Just Ideas. Someone will help you soon.

Exactly where is the leak coming from? Make sure its not coming from your valve cover.

it is actually dripping down the outside of the #2 exhaust pipe from the bottom.

Would you take detailed pics of your engine and post them?

Not too familiar with the 650s but does it have a tach drive cable like the big boys?

Tach cable goes in above the #3 and #4 exhaust port. I'll take some pics and post. Have seen similar posts where blown gaskets were the problem. It would be swell if that was the problem, though I think its more than that. I'll get the headers off, take some pics and report back. Thanks, guys.

Warning, some of these aren't pretty. Here's some up close and personal pics of the #2 exhaust port. From the first pic it seems the oil is coating the inside of the port pretty good. From the second pic, it looks like the gasket between the cylinder head and cylinder is intact, maybe even original. Neither pic seems to show a leak coming from the exhaust header bolts, though oil has covered the bottom one. The oil is likely coming from the cylinder itself.

So, am I looking at a new piston, piston ring(s) or piston sleeve? I'm guessing the only way to definitively know is to dig in. Thoughts?

Here's the 2nd pic.

compression check. check plug for fouling. leak down check.

Its a new plug so there's a hint of soot on the tip, but the threads are coated in oil.

Compression tested the other day. All seemed well within range.

#1 - 105psi
#2 - 100psi (110psi upon retest)
#3 - 120psi
#4 - 110psi

Had the bike running in the garage for all of 5 minutes before the oil leak became apparent. It was a sizable amount, not a trickle. Made a baseball-sized puddle on the floor!

On the bright side, the ignition wire patch on #2 works and the bike sounded great after the carb synch. Little victories, little victories...

Got to be leaking from outside or inside near head? your compression is little low for all cycl. none way low showing concern from oil blowby, plug would be oily around the electrode. If there seems to be alot of oil it has to be a leak from ??? we dont know. I hope you get an answer soon. Clean it with carb cleaner and after dry start the bike and have some eyes all around to watch for the trail to start. Best of luck. Over and out.