I have occasionally experienced this. It doesn't happen during the day as I drink a lot of water - half a gallon to a gallon per day - but I don't drink while I'm asleep.
I don't think it's as simple as ketosis, because I've spent months in ketosis without this issue. For me, it tends to happen when I'm generating a lot of urine - when I wake up with a dry mouth, it's usually with an uncomfortably full bladder as well.
I currently suspect that it's associated with substantial gluconeogenesis - conversion of excess protein into glucose in the liver. Some amino acids in the protein cannot be used in this manner and have to be eliminated in the urine by the kidneys. I'm pretty sure that's what causes the full bladder in the morning, but as the dry mouth is only usually associated with the full bladder, I'm not as sure about the dry mouth.
At any rate, lots of water seems to be a good solution during the day at least. You could experiment with cutting back a bit on protein intake - fewer ounces of fattier meat, perhaps, or if you are trying to lose weight, just less protein without replacing it.