I also know that my intake had a little water coming out the front, no water I'm the oil.
I'M NOT SURE I UNDERSTAND.

I believe your compression gauge is giving a consistent low reading. I had one last year that I have had for 10 years suddenly do the same as yours when i went to test a motor . Bought a new gauge and the same cylinders were reading 155 instead of the 120 i was getting.

I think you might have a intake leak drawing oil from the valley into that cylinder..

Motors do not wear out to the point that you lose power unless it is a small diesel that had been lugged all its life or if is a motor that runs continuously like on a generator or something like a auto engine being used as a large irrigation pump.And those motors will have 1000s of hours on them before they show signs of wear to the point ayht it can be measured in lost power.

For an example on our parasail boats we were getting 4000 hours in a matter of 3 to 4 years use with no problems out of a 330 hp 454. These motors ran fine when we would replace them just because they had been run in salt and had served their use. They were not lightly used either pulling a parasail is like trying to get your boat up on plane continuously and also a hydraulic pump runs off the front for the winch and that sucks 30 horse off.

so what I am saying is motors do not wear out from normal use unless you abuse one by over revving it or over heating it hard . The stock 454 is very very durable..

I think you are making a mistake pulling your heads. I would pull the intake 1st chance you get and take a look.at that.

It would be worth re-doing the compression test with throttle & choke open as well as engine up to temp. If results are still suspect, then move onto a cylinder leak test, because that will tell you how much leak you have and where it is coming from.

With that info, you can better plan a rebuild or what ever needs to be done.

All of that was done.

Thanks pantera, the boat is put away for the winter I will start early spring and recheck in the spring.

Agreed. Pull the intake and have look. My guess is that you will find oil coming from the intake. Either that or a bad valve seal (which you can see when you remove the intake). I think your long-block is fine.

Thanks I hope it's that easy