Was the engine out of a snow blower or pump?
First thing I would do is check the valve lash on the exhaust valve.
If the valve is burned, the lash would more than likely be tighter, because of the valve probably into the seat more.
If that's the case, I would try adjusting that valve first, & set the gap a bit looser than spec. & then run it again & see if that helps.
If it does, you will have then probably pinpointed the problem.
eReplacementparts.com, has all the parts for that engine, & pretty decent instructions for fixing it.
Exhaust valve comes with a collar / retainer. & they have a complete top end gasket set for it including exhaust gaskets, for around 21 bucks.
I always highly recommend a new exhaust gasket, regardless.
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