Agreed, valve seals. You can buy an adapter to apply compressed air to the spark plug hole and keep the valves in place so you can do the job without having to remove the head.
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-Evan
Benz Fleet:
1968 UNIMOG 404.114
1998 E300
2008 E63
Non-Benz Fleet:
1992 Aerostar
1993 MR2
2000 F250
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