Sounds like the oil is full of gas to me. Or at the least it ran oil into the cylinder when you tipped it to chip at the mud. If this is the whole story and nothing but the whole story I would not worry until the shop looked it over and made their observations known. Your boss is a typical boss. I have never had one that was not unreasonable at times and always trying to gain a buck or one hundred bucks any time and any way he could from any employee. In fact, most of the guys I have worked for over the years simply could not get along with anyone long enough to hold a job so they had to become a boss in order to make a living.