Once again I recommend the wand style thin hot knife. You can carve any direction you slant the thing at an best of all any type foam and it doesn't leave any mess behind and can be even used with the foam in place on a layout. Just need a source of electric to plug the electric adapter in.
I use the sanding sponges that HF sells. Carve the basic shape using either an Xacto knife or saw then smooth using the course sanding sponge bent to shape. Fill any deep voids with some 'lightweight spackle' (same thing that WS sells as lightweight scenery plaster) from the big box store. In fact, I just smear it down the creeks and to fill the bottom of the pond, let dry and it's ready for some paint and 'water'.
