During drilling and completion, the primary mechanisms of near-wellbore formation damage include pore throat constriction, water blocking, plugging with drill solids and mud products, and loading of the reservoir with drilling or completion fluids. Among these mechanisms, some of the most severe ones encountered in elastic reservoir applications are the pore throat constriction due to clay swelling, and water blocking resulting in a reduction in the relative permeability to hydrocarbons. A novel matrix stimulation concept which involves the application of intense heat for the treatment of water blockage and clay related formation damage in water sensitive formations is presented in this paper. Bench-scale heating tests were carried out on water sensitive sandstone cores to determine the effect of heat on effective permeability, fluid saturation, and mineralogy (i.e., degradation of in situ minerals). Results indicated that heat treatment at 600 degrees C can improve air permeability of a damaged core by about 51% above the initial permeability. Dramatic permeability increases of 764% and 988% above the initial reservoir permeability occurred at 800 degrees C for the cores taken from the gas-and oil-bearing formations, respectively.