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Some oil yes, but it sounds like he is getting a lot of oil... have you disassembled the dryer yet? The dryer also needs to purge regularly to stay clean and shed water and emulsified oil. It purges each time the compressor gets the wet tank to set pressure and the governor unloads the...

Well unfortunately it is probably a worn compressor. The comp pulls some vacume every time the piston goes down to draw in air. One thing y0u can check is the inlet airline up to the main air pipe is not kinked/crushed and your air filter is clear so it pulls as little vacuum as possible...