The methane hydroxylation reaction by a Compound II (Cpd II) mimic PorFe(IV)=O and its hydrosulfide-ligated derivative [Por(SH)Fe-IV=O](-) is investigated by density functional theory (DFT) calculations on the ground triplet and excited quintet spin-state surfaces. On each spin surface both the sigma- and pi-channels are explored. H-abstraction is invariably the rate-determining step. In the case of PorFe(IV)=O the H-abstraction reaction can proceed either through the classic pi-channel or through the nonclassical sigma-channel on the triplet surface, but only through the classic sigma-mechanism on the quintet surface. The barrier on the quintet sigma-pathway is much lower than on the triplet channels so the quintet surface cuts through the triplet surfaces and a two state reactivity (TSR) mechanism with crossover from the triplet to the quintet surface becomes a plausible scenario for C-H bond activation by PorFe(IV)=O. In the case of the hydrosulfide-ligated complex the H-abstraction follows a pi-mechanism on the triplet surface: the sigma* is too high in energy to make a sigma-attack of the substrate favorable. The sigma- and pi-channels are both feasible on the quintet surface. As the quintet surface lies above the triplet surface in the entrance channel of the oxidative process and is highly destabilized on both the sigma- and pi-pathways, the reaction can only proceed on the triplet surface. Insights into the electron transfer process accompanying the H-abstraction reaction are achieved through a detailed electronic structure analysis of the transition state species and the reactant complexes en route to the transition state. It is found that the electron transfer from the substrate sigma(CH) into the acceptor orbital of the catalyst, the Fe-O sigma* or pi*, occurs through a rather complex mechanism that is initiated by a two-orbital four-electron interaction between the sigma(CH) and the low-lying, oxygen-rich Fe-O sigma-bonding and/or Fe-O pi-bonding orbitals of the catalyst.